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I         PRESIDENTIAL  CAMPAIGN  ACTIVITIES  OF  1972 

7 
^13 


SENATE  RESOLUTION  60 


EXECUTIVE  SESSION  HEARINGS 


•BEFORE  THE 


SELECT  COMMITTEE  ON 
PRESIDENTIAL  CAMPAIGN  ACTIVITIES 


OF  THE 


UNITED  STATES  SENATE 

NINETY-THIRD  CONGRESS 

FIRST  SESSION 


WATERGATE  AND  RELATED  ACTIVITIES 
Milk  Fund  Investigation 

WASHINGTON.  D.C.,  NOVEMBER  13,  14,  15,  16,  DECEMBER  4,  AND  11.  1973 

Book  14 


Printed  for  the  use  of  the 
Select  Committee  on  Presidential  Campaign  Activities 


^ 


PRESIDENTIAL  CAMPAIGN  ACTIVITIES  OF  1972 

SENATE  RESOLUTION  60 


EXECUTIVE  SESSION  HEARINGS 

BEFORE  THE 

SELECT  COMMITTEE  ON 
PRESIDENTIAL  CAMPAIGN  ACTIVITIES 

OF  THE 

UNITED  STATES  SENATE 

NINETY-THIRD  CONGRESS 

FIRST  SESSION 


WATERGATE  AND  RELATED  ACTIVITIES 
Milk  Fund  Investigation 

WASHINGTON,  D.C.,  NOVEMBER  13,  14.  15,  16,  DECEMBER  4.  AND  11.  1973 

Book  14 


W 


Printed  for  tbe  use  of  the 
Select  Committee  on  Presidential  Campaign  Activities 

U.S.  GOVERNMENT  PRINTING  OFFICE 
30-337  O  WASHINGTON   :   1074 


For  sale  by  the  Superintendent  of  Documents,  U.S.  Government  Printing  Office 
Washington,  D.C.  20402  -  Price  $3.70 


SENATE  SELECT  COMMITTEE  ON  PRESIDENTIAL 
CAMPAIGN  ACTIVITIES 

(Established  by  S.  Res.  60,  93d  Congress,  1st  Session) 


SAM  J.  ERVIN,  Jr.,  North  Carolina,  Chairman 
HOWARD  H.  BAKER,  Jr.,  Tennessee,  Vice  Chairman 
HERMAN  E.  TALMADGE,  Georgia  EDWARD  J.  GURNEY,  Florida 

DANIEL  K.  INOUYE,  Hawaii  LOWELL  P.  WEICKER,  JR,,  Connecticut 

JOSEPH  M.  MONTOYA,  New  Mexico 

Samuel  Dash,  Chief  Counsel  and  Staff  Director 

Fred  D.  Thompson,  Minoriti/  Counsel 

RuFUS  L.  Edmisten,  Depntp  Chief  Counsel 

Arthur  S.  Miller,  Chief  Consultant 

David  M.  Dorsen,  Assistant  Chief  Counsel 

Terry  F.  Lenzner,  Assistant  Chief  Counsel 

James  Hamilton,  Assistant  Chief  Counsel 

Carmine  S.  Bellino,  Chief  Investigator 

Marc  Lackritz,  Assistant  Counsel 

James  C.  Moore,  Assistant  Counsel 

Ronald  D.  Rotunda,  Assistant  Counsel 

W.  Dennis  Summers,  Assistant  Counsel 

Alan  S.  Weitz,  Assistant  Counsel 

Robert  F.  Muse,  Jr.,  Assistant  Counsel 

Mark  J.  Biros,  Assistant  Counsel 

Wayne  H.  Bishop,  Chief  Field  Investigator 

R.  Scott  Armstrono,  Investigator 

Michael  J.  Hershman.  Investigator 

Donald  G.  Sander.s,  Deputy  Minority  Counsel 

Howard  S.  Liebengood,  Assistant  Minority  Counsel 

Michael  J.  Madigan,  Assistant  Minority  Counsel 

Richard  L.  Schultz,  Assistant  Minority  Counsel 

Robert  Silverstein,  Assistant  Minority  Counsel 

Carolyn  M.  Andrade,  Administrative  Assistant 

Carolyn  E.  Cohen,  Office  Manager 

Joan  C.  Cole,  Secretary  to  the  Minority 

^Executive  session  hearings  released  to  the  public  after  the  filing 
of  the  final  report  of  the  Senate  Select  Committee.3 

(H) 


CONTENTS 


HEARING  DAYS 

Page 

Tuesday,  November  13,  1973 5859 

Wednesday,  November  14,  1973 5907 

Thursday,  November  15,  1973 6051 

Friday,  November  16,  1973 6105 

Tuesday,  December  4,  1973 6245 

Tuesday,  December  11,  1973 6293 

CHRONOLOGICAL  LIST  OF  WITNESSES 

Tuesday,  November  13,  1973 

Hanman,  Gary  Edwin,  senior  vice  president  of  Mid-America  Dairymen, 

Inc.,  accompanied  by  John  C.  Gage,  counsel 5859 

Wednesday,  November  14,   1973 

Lilly,   Bob  A.,  legislative  director  for  Associated  Milk  Producers,   Inc., 

accompanied  by  Anthony  Nicholas,  counsel 5907 

Thursday,  November  15,  1973 

Connally,  John  B.,  former  Secretary  of  the  Treasury  and  former  Governor 

of  Texas ;  accompanied  by  William  R.  Eckhardt,  counsel 6051 

Friday,  November  16,  1973 
Lilly,  Bob  A.,  testimony  resum.ed 6105 

Tuesday,  December  4,  1973 

Harrison,   Marion   Edwyn,   member  of  the  former  firm   of   Reeves   and 

Harrison,  which  was  retained  by  AMPI 6246 

Tuesday,  December  11,  1973 

Townsend,  Tom,  former  special  assistant  to  the  general  manager  of  AMPI, 
presently  director  of  special  projects  for  Mid-America  Dairymen,  Inc. ; 
accompanied  by  M,  Randall  Vanet,  counsel 6293 

AFFIDAVITS 

John  B.  Connallv,  April  11  and  May  9,  1974 6102 

Bob  A.  Lilly,  April  23,  1974,  v/ith  attachment 6218 

Alan  S.  Weitz,  May  30,  1974,  with  attachments 6222 

EXHIBITS  SUBMITTED  FOR  THE  RECORD 

Hanman  Exhibits 

No.  1 — (5883)   Letter  to  Gary  Hanman  from  Marion  Edwyn  Harrison, 
dated  March  30,  1971,  re  names  and  addresses   of 

Republican  committees -5901 

Note. — Figures  Sn  parentheses  Indicate  page  that  exhibit  was  made  part  of  the  record. 

{IH) 


IV 


Han  MAN  Exhibits — CJontinued 

No.  2— (5888)  Letter  to   ADEPT  Committee  from   Gary  Hanman, 

dated    September  13,  1971.  Subject:   Quarterly  re-     Paw 

port 5903 

No.  3 — (5890)  Letter  to  Jake  Jacobsen  from  Gary  Hanman,  dated 

August  17,  1972,  re  foUowup  letter 5905 

Lilly  Exhibits 

No.  1 — (5920)  Copy  of  a  debit  memo  from  Citizens  National  Bank  to 
TAPE,  dated  August  1,  1969,  in  the  amount  of 
$  100, 000 , 5990 

No.  2 — (5921)  Sheet  of  paper  from  a  yellow  pad  with  Isham's  hand- 
written   notes,    re    attorneys'    names,    amounts    of 

money,  and  so  forth 5991 

No.  3 — (5923)   Copy  of  pnjmissory  note  to  Citizens  National  Bank, 

Austin,  Tex.,  and  several  renewals 5992 

No.  4 — (5926)   A  security  agreement  dated   December   17,    1969,   in 

amount  of  $100,000,  with  Bob  A.  Lilly  as  debtor...     5995 
Nq.  ,5 — (5926)   A  security  agreement  by  TAPE  for  the  benefit  of  Bob 
A.  Lilly  for  $100,000  and  the  collateral  is  stated  as 
Citizens  National  Bank  Certificate  of  Deposit  No. 
219,  for  $100,000  issued  to  TAPE  and  signed  by  Bob 

Isham  as  trustee 5997 

No.  6 — (5935)   A   schedule   compiled   by    Mr.    Lilly's   accountant   of 

various  note  transactions  with  various  individuals 5999 

No.  7 — (5935)  Two  checks  with  endorsements,  drawn  on  account  of 
Jacobsen  and  Long.  One  check  for  $2,000,  written  to 
Joe  Long,  the  other  for   $3,000  to   Jake  Jacobsen. 

Both  are  signed  Eula  Bulkley 6002 

No.  8 — (5936)  Two  checks  with  endorsements  drawn  on  account  of 
Jacobsen  and  Long;  one  check  to  Jake  Jacobsen  for 
$2,875,  the  other  to  Joe  R.  Long  for  $2,125.  Both  are 

signed  Eula  Bulkley . 6003 

No.  9— (5938)  Check  and  voucher  for  $10,000  from  AMPI  to  Jacobsen 
and  Long.  Also  attached  billing  from  Jacobsen  and 
Long  with  note  attached  to  Bob  Isham  from  Joe 

Long,  stating:  "This  is  a  special  billing" 6004 

No.  10 — (5938)  Cover  letter  from  Jacobsen  and  Long  to  AMPI,  dated 
April  21,  1970,  with  bilUug.  Check  and  voucher  for 

payment  also  shown . 6007 

No.  11 — (5939)  Billing  from  Jacobsen  and  Long  to  AMPI  dated  July 
16,    1970.    Check   and   voucher   for   payment   also 

shown 6010 

No.  12 — (5940)  Cover  letter  from  Jacobsen  and  Long  to  AMPI  dated 
August  31,  1970,  with  billing.  Check  and  voucher  for 

paj'^ment  also  shown 6012 

No.  13 — (5943)  A  series  of  documents  relating  to  the  invoice  and  pay- 
ment in  December  1969  to  Mr.  Van  Dyk  in  the 

amount  of  $18,050 6015 

No.  14 — (5944)   Check  with  endorsement  to  Bob  A.  Lilly  signed  by 
Ted  Van   Dyk  for  $10,000,   dated   December  29, 

1969 6018 

No.  15— (5944)   Letter  dated  March  10,  1970,  from  Ted  Van  Dyk  to 
Bob  A.  Lilly,  re  Lilly  receiving  a  withholding  slip 

for  $10,000 6019 

No.  16— (5946)  Cover  letter  to  Bob  Lilly  from  Ted  Van  Dyk,  dated 
August  27,  1970,  with  invoice,  check,  and  voucher 
in  amount  of  $19,055.72,  dated  September  4,  1970.  6021 
No.  17 — (5948)  Typewritten  memorandum  for  notes  of  Bob  Lilly  for 
his  own  use,  written  on  April  17,  1970  re  conversa- 
tion with  Milt  Semer  having  received  check  from 
Ted  Van  Dyk  as  a  contribution  to  Muskie  cam- 
paign for  $5,000 6024 

Note. — Figures  in  parentheses  Indicate  page  that  exhibit  was  made  part  of  the  record. 


Lilly  ExHierrs — Continued 

No.  18 — (5950)   Memorandum  from  Ted  Van  Dyk  to  Bob  Lilly  dated 

September  14,  1970,  relating  to  a  $1,000  check  to     Page 
"  Maine  for  Muskie" 6025 

No.  19— (5951)  Letter  of  July  9.  1970,  from  Ted  Van  Dyk  to  Don 
Nicoli  pertaining  to  contributions  to  the  Muskie 
campaign;  also  making  references  to  the  milk  pro- 
gram. Two  checks  attached 6026 

No.  20 — (5951)  Letter  fronri  Milton  Semer  to  David  Parr  re  summary 
of  their  telephone  conversation  about  Muskie  cam- 
paign      6028 

No.  21— (5951)  Various  handwritten  notes,  checks  and  correspondence 

re  contributions  to  the  Muskie  campaign 6029 

No.' 22 — (5958)  Note  on  Stuart  Russell  note  paper  re  $5,000  cash  con- 
tribution for  Page  Belcher  campaign  funds 6041 

No.  23 — (5964)  Copy  of  check  with  endorsement  shown  made  out  to 
cash  for  $5,000  and  signed  by  Stuart  H.  Russell, 
with  handwritten  notes  at  bottom  written  by  Mr. 
Nicholas 6042 

No.  24 — (5965)   Check  with  endorsement,  dated  October  5,  1971,  made 

out  to  cash  for  $4,000  and  signed  by  Jane  Hart 6043 

No  25 — (5966)  Check  with  endorsement  dated  August  27,  1970,  made 
out  to  Bob  Lilly  for  $10,000,  signed  Stuart  Russell 
and  endorsed  by  Bob  Lilly  and  Joe  Nigrelle 6044 

No.  26 — (5972)  Summary  of  notes  of  Bob  Lilly  re  contributors  with 
dates  and  type  of  contribution,  whether  cash  or 
check,  and  where  this  money  was  used 6045 

No.  27 — (5984)  Check  stubs  numbered  398  through  409,  all  dated  April 
26,  1971,  each  for  $2,500  with  "Void"'  written  across 
each.  Only  stubs  398-400  shown 6050 

No.  28— (6119)  Letter  from  Dr.  Mehren  to  .John  Butterbrodt,  W.  R. 
Griffith,  Melvin  R.  Besem.er,  and  Robert  Bon- 
necroy  of  the  Committee  for  TAPE  with  attach- 
ment of  letter  from  Robert  Strauss,  chairman, 
DNC,  to  Dr.  Mehren 6186 

No.  29 — (6119)  Handwritten  cover  memorandum  from  George  Mehren 
dated  March  29  with  an  attached  letter  of  March  27. 
R.  M.  "Dick"  Herman  to  Dr.  Mehren  written  on 
stationery  from  the  1972  Republican  National  Con- 
vention       6 189 

No.  30 — (6121)  Copies  of  30  checks  drawn  on  Citizens  National  Bank, 
each  dated  April  1972,  in  the  amount  of  $5,000, 
signed  by  Dr.  Mehren  and  L.  E.  Elrod  with  the 
payee  left  blank  and  "Void"  written  across  each 
check.  On  the  same  page  of  each  copy  there  is  a 
blank  receipt  io  be  used  for  each  check.  Only  checks 
Nos.  25  and  5i  through  54  are  shown;  Nos.  26 
through  50  have  been  omitted  to  avoid  duplica- 
tion       6191 

No.  31 — (6148)  Letter  of  agreement  between  Valentine,  Sherman  As- 
sociates and  AMPI,  signed  by  Bob  A.  Lilly  on 
April  29,  1971,  re  Valentine,  Sherman  compiling 
a  master  hie  of  farmers  and  farm-oriented  families 
with  rural  addresses  for  AMPI.  Related  corre- 
spondence also  shown 6193 

No.  32 — (6164)  Agreement  between  Valentine,  Sherman  Associates 
and  AMPI,  signed  by  Harold  S.  Nelson  with  no 
date,  re  compiling  master  file  of  farmers  and  farm- 
oriented  families  for  AMPI 6216 

No.  33 — (6178)  Handwritten  notes  of  Bob  Lilly  of  annual  figures  which 
Stuart  Russell  said  represented  transfers  of  moneys 
to  Lilly  or  others 6217 

Note. — Figures  In   parentheses   indicate  page  that  exhibit  was  made  part  of  the   record. 


VI 


CoNNALLY  Exhibits 


No.  1 — (6056)    Record  of  phone  calls  and  appointments  for  March  23,     P»Be 
1971 6092 

No.  2 — (6056)    Record  of  phone  calls  and  appointments  for  March  16, 

1972 6093 

No.  3 — (6080)  Record  of  appointments  for  August  2,  1972 6094 

No.  4 — (6080)  Letter  to  John  Connally  from  Joseph  J.  Westwater,  vice 
president  of  Dairymen,  Inc.,  dated  August  15,  1972, 
re  needed  changes  in  Federal  programs 6095 

No.  5 — (6080)  Letter  to  John  Connally  from  Gary  Hanman,  senior 
vice  president  of  Mid-America  Dairymen,  Inc.,  dated 
August  17,  1972.  This  is  a  foUowup  letter  on  the  need 
for  Federal  assistance  to  the  dairy  industry.  Attempts 
to  restructure  itself  for  increased  demands  for  cheese..  6099 
Harrison  Exhibits 

No.  1 — (6252)   Letter  from  Marion  Harrison  to  Harold  Nelson  dated 

November  2,  1970,  re  TAPE— contributions 6282 

No.  2 — (6253)  Letter  to  President  Nixon  from  Patrick  Hillings  dated 
December  16,  1970,  re  section  22,  Tariff  Commission 
(milk)  recommendations — Presidential  Proclama- 
tion       6285 

No.  3 — (6264)  Marion  Harrison  letter  to  Harold  Nelson  dated  June 
16,  1971,  concerning  contributions  and  enclosing 
names  and  addresses  of  25  committees  for  receiving 

them 6287 

TowNSEND  Exhibits 

No.  1 — (6296)  Memorandum  on  Reeves  &  Harrison  stationery  to  the 
special  counsel  to  the  President,  re  milk  import 
quotas 6328 

No.  2 — (6297)  Memorandum  to  Harold  Nelson  and  Dave  Parr  from 
Tom  Townsend,  dated  October  19,  1970,  re  visit  of 
Mr.  Townsend  with  Mr.  Harrison  and  Mr.  Gal- 
braith 6331 

No.  3 — (6304)   Price-support   paper  of  Associated   Dairymen,   Inc., 

dated  February  24,  1971--. 6332 

No.  4 — (6305)   92d    Congress   telephone    directory   which   has   been 
marked  by  Mr.  Townsend  for  purpose  of  keeping 
'  track  of  "who  was  calling  who" 6363 

No.  5 — (6305)  Handwritten  list  of  legislative  bills  and  their  sponsors.     6369 

No.  6 — (6315)  Letter  to  David  Parr  from  Gary  Hanman  dated 
August  19,  1971,  re  enclosure  of  cover  letter  to  Mur- 
ray Chotiner.  Also  letter  to  Gary  Hanman  from 
David  Parr  re  instructions  to  mail  $2,500  to  each  of 
the  12  committees  named.  List  of  the  committees  are 

enclosed 6372 

Note. — Figures  in  parentheses  indicate  page  that  exhibit  was  made  part  of  the  record. 


PRESIDENTIAL  CAMPAIGN  ACTIVITIES  OF  1972 
MILK  FUND  INVESTIGATION 


TUESDAY,  NOVEMBER  13,   1973 

U.S.  Senate, 
Sei.£Ct  Committee  on 
Presidential  Campaign  Activities, 

W aslmigton^  D.C 

The  Select  Committee  met,  pursuant  to  notice,  at  1 :40  p.m.,  in 
room  G-334,  Dirksen  Senate  Office  Building. 

Present :  Senators  Montoya  and  Weicker. 

Also  present:  Alan  Weitz,  assistant  majority  counsel;  and  James 
Leo  Elder,  minority  staff  investigator. 

Senator  Weicker.  Would  you  stand  and  raise  your  right  hand, 
please.  Do  you  swear  the  evidence  you  are  about  to  give  the  committee 
is  the  truth,  the  whole  truth,  and  nothing  but  the  truth,  so  help  you 
God'^ 

Mr.  Hanman.  I  do. 

Mr.  Weitz.  Mr.  Hanman,  for  the  record  would  you  state  your  full 
name  and  address  ? 

TESTIMONY  OF  GARY  EBWTK  HANMAN,  ACCOMPANIED  BY 
JOHN  G.  GAGE,  COUNSEL 

Mr.  Hanman.  Yes.  My  name  is  Gary  Edwin — E-d-w-i-n — Hanman. 
My  address  is  R.F.D.  No,  2,  Niangua — N-i-a-n-g-u-a — Mo. 

Mr.  Weitz.  And  I  see  you  are  accompanied  by  counsel,  and  would 
he  identify  himself  ? 

Mr.  Gage.  John  C.  Gage,  G-a-g-e,  1000  Bryant  Building,  Kansas 
City,  Mo.  64106.  And  I  am  counsel  for  Mr.  Hanman  individually  and 
for  ADEPT,  which  are  the  initials  for  Agricultural  and  Dairy  Edu- 
cational Political  Trust,  and  for  Mid-America  Dairymen,  Inc. 

Senator  Weicker.  Counsel  for  the  committee,  let  me  ask  this  ques- 
tion. 

Mr.  W^eitz,  would  you  at  this  time  just  for  the  mechanics,  care  to 
have  any  exhibits  entered  and  marked,  identified  as  such,  just  so  yon 
can  use  them  as  you  proceed  without  having  to  go  through  this? 

Mr.  Weitz.  Yes,  let  us  do  that. 

If  in  response  to  the  subpena,  if  you  have  documents  to  produce 

Mr.  Gage.  Here  are  the  documents. 

Now,  before  we  proceed,  there  have  been  two  subpenas  served.  One 
was  on  Mr.  Hanman,  and  had  reference  to  ADEPT.  Another  was  on 
Mr.  Hanman  as  senior  vice  presidimt  of  Mid- America  Dairymen,  Inc. 

(5859) 


5860 

The  latter  siibpena  by  agreement  was  mailed  to  me,  and  I  have  it 
here.  And  I  am  going  to  initial  it  and  hand  it  back  to  the  committee  to 
acknowledge  sendee. 

This  is  tlie  group  of  documents  Ave  brought  with  us.  We  have  not 
quite  had  time  to  organize  our  bookkeeping  sj^stem  as  well  as  we  like, 
and  we  may  need  a  little  time  digging  out  copies  when  Mr.  Hanman 
is  asked  about  some  of  them.  Rut  we  have  got  copies  here. 

Mr.  Weitz.  Mr.  Hanman.  could  you  identify  in  at  least  n  general 
way  what  these  documents  or  files  represent? 

Mr,  Hanmax.  It's  my  understanding  that  the  documents  presented 
here  are  the  documents  rex]uested  in  the  two  subpenas. 

Mr.  Gage.  With  certain  modifications,  which  Mr.  Weitz  and  I 
worked  out. 

Mr.  Weitz.  Or  limitations,  actually. 

Mr.  Gage.  Limitations  or,  you  might  say,  exceptions.  Tlie  subpena. 
at  least  the  second  subpena  was  so  broad  it  might  have  taken  a  truck 
to  bring  all  of  the  documents  back  relating  to  all  contacts  with  the  U.S. 
Government  and  all  of  the  milk  marketing  matters  that  Mid-America 
Dairymen  is  engaged  in,  so  that  by  discussion  with  Mr.  Weitz  those 
documents  were  narrowed  to  documents  relating  to  the  1971  milk  price 
support,  increase. 

Mr.  Hanman.  And  the  1972  Presidential  campaign, 

Mr.  Gage.  Well,  the  1972  Presidential  campaign  was  covered,  right. 

Mr.  Weitz,  Could  you  identify  by  file,  or  are  they  marked  ? 

Perhaps  we  should  enter  on  the  record  at  least  identification  of 
what  each  file  contains  without  going  through  each  individual  docu- 
ment. 

Mr.  Gage.  Let  me  read  the  categories  here.  There  are  documents 
relating  to^ correspondence  with  or  representation  by  Mr.  Jake  Jacob- 
sen  and  Mr.  Marion  Harrison,  and  their  firms,  Jacobsen  and  Long, 
and  Reeves  and  Harrison. 

There  are  documents  relating  to  ADEPT,  which  further  relate  to 
the  1972  Presidential  campaign.  There  are  documents  with  respect 
to  Mid-America  Dairymen  financial  data. 

Mr.  Weitz.  For  what  periods  ? 

Mr.  Gage.  For  period  1968  through  1972.  And  here  again,  there 
was  some  discussion  between  Mr.  Weitz  and  myself  to  zero  in  on  just 
what  was  required.  We  have  a  list  of  legal  fees  and  expenses  paid. 
We  have  a  list  of  salaries  and  expenses  paid  to  top  management 
personnel.  We  have  an  annual  unaudited  financial  statement  of 
Mid-America  Dairymen  for  each  of  those  years.  And  then  we 
have  another  large  group  of  documents  relating  to  contacts 
with  persons  in  the  administration,  as  opposed  to  contacts  only  with 
persons  in  Congress,  that  had  some  reference  to  the  1971  increase  in 
price  support  level.  This  file  does  include  copies  of  letters  which 
we  received  which  Congressmen  wrote  to  the  President  and  the  Secre- 
tai-y  of  Agriculture,  and  because  of  our  interest  these  letters  were 
mailed  to  Mid- America  Dairymen. 

But  other  than  that,  it  does  not  include  contacts  with  Congress- 
men. 

Mr.  Weitz.  Ts  this  the  scope  of  your  production  ? 

Do  you  have  any  other  documents  that  you  want  to  produce  at 
this  time  ? 


5861 

Mr.  Gage.  I  believe  that  covers  the  general  category. 

Senator  Weicker.  Well,  is  there  any  reason  why  we  cannot  accept 
these  documents  as  characterized  and  described  by  counsel.  Mr.  Gage? 

And  he  gave  about  five  or  six  different  categories  there,  as  I  under- 
stand it.  Is  there  any  reason  why  thev  cannot  be  marked  and  num- 
bered corresponding  to  categories  which  he  gave,  and  then  receiA' ed  ? 

Mr.  Wettz.  T  think  that  is  adequate  in  terms  of  identification.  I 
was  thinking  more  in  terms  of  reviewing  some  documents.  Perhaps 
I  will  just  have  to  do  this  at  a  later  time,  and  should  we  have  subse- 
quent questions,  have  the  witness  return  ? 

Senator  Weicker.  Well,  I  think  as  the  witness  goes  ahead  and 
gives  testimony,  if  you  want  further  identification  when  he  refers 
to  a  document,  do  it  again.  I  think  that  would  be  the  best  way.  But 
at  least  this  way  we  can  receive  the  documents  represented. 

Mr.  Weitz.  And  have  them  identified,  at  least  bv  catagories. 

Senator  Weicker,  Have  them  identified  as  characterized  by  Mr. 
Gage,  and  then  if  you  want  to  have  additional  identification  and 
numbering,  that  can  take  place  as  the  witness  testifies. 

Mr.  Gage.  I  might  also  mention  that  these  are  Xeroxed  copies, 
including  Xerox  copies  of  checks.  We  have,  I  believe,  all  of  the 
originals" Avith  us.  But  T  discussed  this  with  Mr.  Weitz.  We  need  these 
originals  back  in  the  office. 

Tf  vou  would  like  to  verify,  you  can. 

Mr.  Weitz.  For  purposes  of  identification,  the  categories  of  docu- 
ments produced :  category  No.  1  would  be  the  folder  containing  the 
Jacobseu  and  Harrison  documents.  Category  No.  2  will  be  the  ADEPT 
documents. 

Categorv  No.  3  would  be  the  financial  data  for  Mid- America.  And 
cateiorort'  No.  4  will  be  certain  contacts  with  administration  officials 
concerning  milk  price  supports. 

Mr.  Hanman,  what  is  your  present  position  with  Mid-America? 

Mr,  Hanman.  Senior  corporate  vice  president. 

Mr.  Weitz.  And  how  long  have  vou  held  that  position? 

Mr.  Hanman.  About  a  year.  Prior  to  that,  T  had  a  different  title, 
but  about  the  same  job. 

Mr.  Weitz.  What  was  your  ti  tie  ? 

Mr.  Haxmax.  Senior  corporate  executive  vice  president,  I  believe. 

Mr.  Weitz.  And  how  long  did  you  hold  that  title  ? 

Mr.  Hanman.  About  6  months  prior  to  that.  T  think  it  was  made 
effective  January  of  1972, 1  believe. 

Mr.  Weitz.  How  long  have  vou  been  with  Mid- America? 

Mr.  Hanman.  Since  it  started  in  Julv  of  1968. 

Mr.  Weitz.  ^Vhen  was  ADEPT  formed? 

Mr.  Hanman.  ADEPT  was  formed  in  late  1970. 

Mr.  Weitz.  Have  vou  ever  held  any  official  title  with  respex^t  to 
ADEPT? 

Mr.  Hanmax.  Yes,  Currently,  I  am  chairmaji  of  the  ADEPT  com- 
mittee. 

Mr.  Weitz.  And  how  long  have  you  held  that  position  ? 

Mr.  Hanman.  Since  April  of  1972.  I  believe  that  is  when  we  reor- 
ganized. 

Mr.  Weitz.  Prior  to  that  time,  who  was  the  official  or  officials  re- 
sponsible for  ADEPT  ? 


5862 

Mr.  Hanman.  Prior  to  that  time,  ADEPT  was  a  political  trust  and 
ADEPT  operated — ^the  trustee  was  William  A.  Delano.  And  there 
was  an  ADEPT  advisory  committee,  composed  of  six  dairy  farmers 
who  were  contributoi-s  to  the  trust,  that  advised  Mr.  Delano  on  his  ac- 
tivities as  trustee. 

I  usually  met  with  that  committee. 

Mr.  Weitz.  Were  yo\i  a  member  of  that  committee  ? 

Mr.  Hanman.  No,  I  was  not. 

Mr.  Weitz.  Were  a  11  of  the  members  of  the  committee  either  officers 
or  directors  of  Mid-A  merica  ? 

Mr.  Hanman.  Yes. 

Mr.  Weitz.  In  what  capacity  did  you  meet  with  the  committee?  In 
your  capacity  as  an  officer  of  Mid- America  ? 

Mr.  Hanman.  I  met  with  them  in  the  capacity  as  a  contributor  to 
the  ADEPT  fund,  and  sort  of  served  as  a  liaison  man  between  Wil- 
liam A.  Delano,  the  trustee,  and  the  committee. 

Mr.  Weitz.  Did  Mr.  Delano  usually  meet  with  the  committee? 

Mr.  Hanman.  Usually,  yes. 

Mr.  Weitz.  Did  you  make  recommendations  to  the  committee  from 
time  to  time,  or  to  Mr.  Delano  for  political  contributions  ? 

Mr.  Hanman.  Yes. 

Mr.  Weitz.  In  general,  could  you  describe  the  way  in  which  the 
committee  would  operate  ? 

Or  more  specifically,  who  would  have,  in  the  normal  course,  responsi- 
bility to  decide  whether  or  not  certain  political  contributions  would  be 
made? 

Mr.  Hanman.  You  are  talking  about  prior  to  April  1,  1972? 

Mr.  Weitz.  Yes. 

Mr.  Hanman.  Well  the  final  authority  of  course  rested  with  the 
trustee,  William  A.  Delano.  The  Dairy  Farmer  Committee  generally 
reviewed  various  races,  various  candidates  for  office,  reviewed  their 
positions  on  agricultural  issues,  on  dairy  issues,  looked  at  their  voting 
records,  and  made  recommendations  relative  to  support  for  their 
candidacy. 

Mr.  Weitz.  In  practice,  who  would  you  say  made  most  of  the  rec- 
ommendations, or  had  final  approval  in  practice  with  regard  to  polit- 
ical contributions  ? 

Mr.  Hanman.  I  would  say  generally,  well  Mr.  Delano  of  course  had 
the  authority.  He  was  a  trustee.  The  original  trust,  as  it  was  set  up, 
authorized  him  to  have  that  sole  and  exclusive  right  to  make  this 
decision. 

I  think  generally  he  followed  the  recommendations  of  the  commit- 
tee, and  I  think  generally  the  committee  probably  followed  my  recom- 
mendations. 

Mr.  Weitz.  Was  there  anyone  else  in  the  organization  who  the  com- 
mittee generally  looked  to  for  advice  or  consent  for  contributions, 
outside  of  yourself  ? 

Mr.  Hanman.  Well  you  mean  who  else  had  input  into  it? 

Mr.  Weitz.  Major  input,  in  the  sense  that  you  did. 

Mr.  Hanman.  Oh,  I  would  say  I  did. 

Mr.  Weitz.  All  risfht. 


5863 

Could  you  tell  us  what  role  Mr.  Nelson  and  Mr.  Parr  of  Associated 
Milk  Producers  played  in  the  formation  or  consultation  with  regard 
to  the  formation  of  x\DEPT  ? 

Mr.  Hantman.  I  would  say  it  was  in  an  advisory  capacity,  in  that 
they  were  involved  in  a  similar  trust  called  TAPE  that  had  started 
before  ADEPT.  And  so  we  looked  to  them  for  advice  and  counsel,  and 
others  within  the  TAPE  organization  with  respect  to  setting  the 
ADEPT  program  up. 
Mr.  Wbitz.  Who  might  those  others  be? 
For  example,  Mr.  Isham  ? 

Mr.  Hanman.  Yes,  I  think  Mr.  Jacobsen,  he  would  give  us  some 
advice  and  counsel,  John  Gage  gave  us  some  advice  and  counsel.  I  think 
even  in  the  early  days  we  had  some  advice  and  counsel  from  a  DeVier 
Pierson,  a  lawyer  here  in  Washington. 

Mr.  Weitz.  At  that  time,  was  Mr,  Jacobsen  retained  as  or  act  as 
counsel,  either  for  ADEPT  or  Mid- America  ? 
Mr.  Hanman.  No. 

Mr.  Weitz.  Was  Mr.  Pierson  in  any  way  retained,  or  did  he  act  as 
counsel  for  Mid-America  or  ADEPT  ? 
Mr.  Hanman.  No. 

Mr.  Weitz.  Were  they  at  that  time  retained  as  counsel  for  Asso- 
ciated Milk  Producers  ? 

Mr.  Hanman.  Mr.  Jacobsen  was.  And  I  am  not  sure  of  Mr.  Pierson. 
Mr.  Weitz.  What  type  of  advice  did  Mr.  Jac(>bsen  give  you  ? 
Mr.  Hanman.  Well,  as  I  recall  in  the  early  days  he  advised  the 
various  dairy  farmers  as  to  what  a  trust  could  do  and  what  it  could  not 
do,  how  you  would  go  about  setting  one  up.  He  would  give  us  advice, 
he  gave  Mid- Am  some  advice,  or  the  board  members  of  Mid- Am  some 
advice  relative  to  what  it  could  do  as  a  corporation  versus  what  could 
be  done  by. a  trust. 

Mr.  Weitz.  Did  Mr.  Pierson  give  you  similar  advice,  or  did  he  coun- 
sel you  on  some  other  area  ? 

Mr.  Hanman.  As  I  recall,  DeVier's  advice  was  along  the  lines  of 
compliance  with  the  reporting  requirement  of  the  trust. 

Mr,  Weitz.  Do  you  know  whether,  did  you  or  do  you  know  whether 
anyone  in  your  organization,  either  aSvSociated  with  ADEPT  or  Mid- 
America,  ever  discussed  with  Mr.  Jacobsen  the  question  of  either  cor- 
porate contributions  by  Mid- America  or  unreported  political  contri- 
butions by  ADEPT? 

First  of  all,  do  you  remember  ever  discussing  such  matters  with  Mr. 
Jacobsen  ? 

Mr.  Hanman.  Yes;  T  am  sure  that  his  early  advice  was  along  the 
lines  that  a  corporation  cannot  make  political  contributions. 

Mr.  Weitz.  Did  he  ever  suggest  by  which  way  a  corporation  mi^ht  be 
able  to  use  its  resources  for  political  contribution  purposes  without 
apparently  running  afoul  of  the  law  ? 
Mr.  Hanman.  What  do  you  mean  by  resources? 
Mr.  Weitz  Funds. 
Mr.  Hanman.  Not  that  I  recall, 

Mr.  Weitz.  Or  the  funds  of  any  of  its  employees  or  officers  ? 
Mr.  Hanman.  Not  that  I  recall.  As  I  recall,  most  of  his  advice  was 
along  the  lines  of  how  you  set  up  a  political  trust,  so  that  you  can  be  in 
compliance  with  the  law. 


5864 

Mr.  Weitz.  Did  he  ever  suggest  that  certain  funds  that  were  col- 
lected from  dairy  farmers  by  ADEPT  or  on  behalf  of  ADEPT  not  be 
reported  so  that  they  could  be  used  to  make  unreported  political  con- 
tributions ? 

Mr.  Hanman.  Not  to  my  knowledge. 

Mr.  Weitz.  Did  any  of  those  activities  ever  take  place  with  the  use 
of  either  ADEPT  funds  or  Mid- America  funds  from  the  period,  let 
us  say  from  the  formation  of  ADEPT  through  1972  ? 

Mr.  Hanman.  Well  first  off,  there  were  no  political  contributions 
by  Mid-Am.  That  is  one  of  the  reasons  we  felt  the  need  for  a  politie-al 
trust.  So  we  wanted  to  set  that  up  so  that  we  would  not  run  afoul  of 
the  law. 

Now,  with  respect  to  ADEPT'S  reporting,  to  the  best  of  my  knowl- 
edge, every  contribution  that  we  have  made  to  a  candidate  for  office 
has  been  reported  in  accordance  with  the  law,  and  the  receipts  of 
ADEPT  have  been  totally  reported  and  accounted  for. 

Mr.  Weitz.  All  right. 

Now,  you  say  ADEPT  was  formed  some  time  in  1970,  late  1970  1 
think  you  said. 

Do  you  recall  the  loan  of  $8,500  which  TAPE  made  to  ADEPT  or 
to  the  ti-ustee  of  ADEPT,  to  enable  it  to  be  formed  and  to  make  con- 
tributions at  the  time  of  its  inception  ? 

Mr.  Hanman.  Yes.. 

Mr.  Weitz.  How  was  that  loan  arranged  ? 

Mr.  Hanman.  I  do  not  know  the  specific  details.  I  believe  in  the 
early  days  the  predecessor  to  ADEPT  was  called  Avery  Associates, 
prior  to  us  settling  on  the  name  of  ADEPT.  And  to  the  best  of  my  rec- 
ollection, the  trustee  of  ADEPl',  Mr.  Delano,  arranged  for  that  loan 
with  the  trustee  of  TAPE,  Mr.  Bob  Isham. 

Mr.  Weitz.  The  loan  was  then  to  Avery  Associates,  or  was  it  just 
after  Avery  Associates  became  ADEPT  ? 

Mr.  Hanman.  I  am  not  sure. 

Mr.  Weitz.  But  it  was  right  around  that  period  of  time  ? 

Mr.  Hanman.  Eight  around  that  same  time,  yes. 

Mr.  Weitz.  If  the  loan  was  made  in  fact  in  mid-1970,  would  that 
pinpoint  the  time  more  correctly,  that  ADEPT  was  formed. 

Mr.  Hanman.  Yes.  I  believe  the  loan  was  in  July  1970.  And  I  do  not 
know  what  the  exact  date  was  when  ADEPT  was  an  active  viable 
trust. 

Mr.  Weitz.  At  that  time,  in  the  first  6  months  or  a  year,  could  you 
estimate  the  total  amount  of  receipts,  the  approximate  amount  of  re- 
ceipts that  were  received  or  were  expected  to  be  received  by  ADEPT 
f  I'om  its  members  ? 

Mr.  Hanman.  For  all  of  1970  ? 

Mr.  Weitz.  i^et  us  say  for  all  of  1970,  as  a  starter.  It  would  be  the 
last  6  months  of  1970, 1  take  it. 

Sir.  Weitz.  This  does  not  show  a  summary  though. 

Mr.  Hanman.  Well,  that's  a  blow  by  blow. 

Mr.  Weitz.  I  understand,  but  is  there  a  summary  figure? 
Mr.  Hansian.  There  is  a  sum  somewhere. 

Mr.  Wettz.  Do  you  run  on  a  fiscal  year  '^ 

Mr.  Hanman.  Calendar  year. 


5865 

Mr.  Weitz.  For  the  record,  we  are  looking  at  a  list  of  receipts,  de- 
posits, and  disbui-sements,  for  ADEPT  from  the  file  marked  "Finan- 
cial Data  of  Mid-  America." 

Mr.  Gage.  That  should  have  been  in  the  ADEPT  file. 

Mr.  Weitz.  I'm  sorry,  of  ADEPT. 

Mr.  Han  MAN.  There  should  be  a  summary  in  there  for  1972. 

Mr.  Weitz.  An  approximate  figure  would  suffice. 

Mr.  Hanman.  Well,  as  cf  January  1,  1972,  we  show  a  cash  on  hand 
of  $75,827.71. 

Mr.  Weitz.  Of  course  that  would  reflect  both  receipts  and  disburse- 
ment from  that  receipt,  so  it  would  not  indicate — what  I  am  after 
really  in  some  notion,  for  example,  of  a  monthly  or  an  annual  level  of 
receipts  in  the  first  6  months  or  a  year  or  so. 

Mr.  Hanman.  If  I  were  to  estimate,  I  would  say  during  the  year 
1970  we  would  probably  have  taken  in  about  S100,000.  And  I  take  that 
from  this  summary  which  shows  cash  on  hand  as  of  January  1,  1972, 
which  shows  $75,827.71,  and  we  did  make  some  expenditures  during 
this  period.  So  this  cash  should  have  been  in  exce^  of  what  our  receipts 
were. 

Mr.  Weitz.  When  you  say  expenditures,  would  that  include  contri- 
butions ? 

Mr.  Hanman.  Yes.  That's  what  I'm  talking  about, 

Mr.  Weit'z.  We'll  look  through  this  later  to  see  if  we  can  locate  the 
specific  figures,  but  that  suffices  for  the  present. 

Mr.  Gage.  The  record  should  be  the  best  evidence,  and  I'm  quite  sure 
they're  in  here. 

Mr.  Weitz.  Of  course. 

Now,  you  say  that  your  best  estimate  would  be  receipts  of  approxi- 
mately $100,000  for  1970,  or  for  the  first  full  calendar  year  aftei  the 
beginning  of  ADEPT? 

Mr.  Hanman.  Yes. 

Mr.  W^Eii'Z.  Could  you  tell  me  why  a  loan  was  made  of  $8,500  at  the 
outset,  rather  than  waiting  for  receipts  to  come  in  in  order  to  begin 
making  contributions  ? 

Mr.  Hanman.  I  think  the  reason  was  that  the  committee  felt  a  need 
to  make  a  contribution  at  that  time.  In  fact,  I  think  they  made  two, 
and  they  had  signed  authorizations  or  else  checks  in  process  which 
would  cover  the  loan ;  and  so  they  went  ahead  and  negotiated  the  loan 
and  made  the  contributions. 

Mr.  Weitz.  W^ere  these  contributions  other  than  for  a  Presidential 
candidate,  these  first  two  contributions  you  mentioned '? 

Mr.  Hanman.  I  think  one  of  them  maybe  was,  and  one  of  them 
wasn't. 

Mr.  Weitz.  Could  you  identify  the  contribution  to  a  Presidential 
candidate?  This  would  have  bepn  1970? 

Mr.  Hanman.  Yes.  On  Jnlv  10  a  contribution  was  made  to  Hum- 
phrey Volunteer  Committee  for  $5,000. 

Mr.  Weitz.  Wasn't  Mr.  Humnhrey  running  for  election  for  Senator 
that  year  ? 

Mr,  Hanman.  He  could  have  been. 

Mr.  Weitz.  Or  for  reelection.  I  should  say, 

Mr.  Hanman.  It  could  have  been. 


5866 

Mr.  Weitz.  So  you're  not  sure  in  fact  that  was  a  Presidential 

Mr.  Hanman.  No.  I  am  not. 

Now,  there  were  two  other  contributions  made,  one  on  the  21st  of 
July  to  Maine  for  IMuskie.  Tliat  was  probably — well.  I  don't  know. 
Let  me  back  up.  There  was  also  on  the  same  date  another  check  made 
out  to  Muskie  Election  Committee  for  $1,700,  and  I  would  assume  that 
one  of  those  is  probably  for  his  Presidential  effort  and  one  for  his  re- 
election effort;  otherwise  we  wouldn't  probably  split  it. 

Mr.  Weitz.  I  see.  Did  anyone  from  Associated  Milk  Producers  or 
TAPE  encouraoe  you.  or  su(><iest.  or  actually  tell  you  to  make  any  of 
these  first  contributions  in  July  of  1970? 

Mr.  Hanman.  Well.  I'm  sure  there  were  some  discussions.  Whether 
they  suf>:<rested  or  encouraored.  I  couldn't  testify;  but  there  were  dis- 
cussions I  am  sure. 

Mr.  Weitz.  Do  you  recall  whether,  in  fact,  the  loan  was  made  in 
order  to  make  contributions  that  (hey  were  anxious  to  have  you  make? 

Mr.  Hanman.  No.  I  couldn't  testify  to  that. 

Mr.  Weitz.  Now,  throuirhout  the  rest  of  1970,  do  you  recall,  well, 
Avere  there  any  other  contributions,  any  other  possible  contributions 
to  Presidential  candidates  during  1970? 

Mr.  Hanman.  I  don't  believe  there  were. 

Mr.  Weitz.  All  right. 

Now,  did  Mid-America  retain  coiuisel  and  actively  participate  in 
the  effort  to  lower  or  eliminate  im])ort  quotas  at  the  close  of  1970 — 
Federal  import  quotas  for  cei'tain  dairy  products? 

Mr.  Hanman.  Well.  I  don't  know  that  we  retained  any  counsel  for 
that  specific  activity,  but  I  am  sui-e  we  Avere  interested  in  it  and  made 
several  contacts  with  people  in  either  Congress,  or  the  Senate,  or  the 
administration.  To  my  knowledge  we  did  not  retain  any  specific  legal 
counsel  on  that. 

Mr.  Weitz.  Was  the  law  firm  of  Peeves  &  Harrison  at  that  time 
acting   as  counsel  for  Mid-America? 

]\fr.  Hanman.  No. 

Mr.  Weitz.  Have  they  ever  acted  as  counsel  for  Mid-America  ? 

Mr.  Hanman.  Yes.  They  are  now. 

Mr.  Weitz.  At  that  time,  they  did  not.  When  did  they  begin?  Wien 
were  they  first  retained  ? 

INIr.  Haniman.  I  belicA-e  they  were  retained  in  either  December  or 
January — December  of  1972  or  January  1973. 

Mr.  Weitz.  T  see. 

Tn  late  1970  did  you  or  anyone  connected  with  Mid-America  con- 
sult with  either — first  consult  with  members  of  the  law  fii-m  of  Peeves 
Si  Harrison  in  connection  Avith  the  im])oi't  quota  question? 

Mr.  Hanman.  Not  to  my  knowledge,  Ave  didn't. 

Mr.  Weitz.  Did  you  knoAv  INIarion  Harrison  at  that  time? 

Mr.  Hanman.  1970?  T  think  I  AA'as  introduced  to  Marion  Harrison 
in  either  late  1970  or  earlv  1971. 

Mr.  Weitz.  ^Y\m  introduced  you  ? 

]\Ir.  Hanman.  Probably  somebodv  in  A]\IPT. 

Mr.  Weitz.  Did  you  knoAv  Mr.  Hillings  at  that  time.  Pat  Hillings 
of  that  law  firm? 

Mr,  Hanman.  No.  No,  I  did  not. 


5867 

Mr.  Weitz.  Were  you  ever  approached  sometime  around  Decem- 
ber of  1970,  by  anyone  connected  with  or  representing  AMPI  in  con- 
nection with  a  possible  commitment  of  some  substantial  amount  of 
contributions  over  the  next  2  years  to  the  President's  reelection? 

Mr.  Hanman.  Not  that  T  recall. 

Mr.  Weitz.  Did  you  ever  discuss  with  anyone  at  AMPI,  such  as 
})erhaps  Mr.  Nelson  or  Mr.  Parr  or  any  of  their  counsel  such  as  Mr. 
Harrison  or  Mr.  Hillings,  a  commitment  or  a  possible  com.mitment  of 
political  contributions  over  a  period  of  time  to  the  President's  re- 
election ? 

Mr.  Hanman.  Well,  I'm  sure  we  wouldn't  have  talked  to  Hillings 
because  I  don't  belie ^^e  I  knew  Mr.  Pollings.  I  could  have  talked  with 
Harrison  relative  to  Mr.  Nixon's  reelection,  and  I'm  positive — I  can't 
recall  names  of  places  and  dates — but  during  this  period  of  time  I'm 
sure  there  were  discussions  between  Mid- Am  and  people  in  AMPI 
relative  to  the  job  that  the  President  was  doing. 

Mr.  Weitz.  Now,  you  said  before  that  you  were  primarily — in  prac- 
tice primarily  responsible  for  at  least  approving  or  consulting  with 
Mr.  Delano  concerning  coiitributions  by  ADEPT. 

Mr.  Gage.  May  I  interrupt  just  a  minute.  I  don't  think  Mr.  Han- 
man's  last  answer  was  quite  responsive  to  your  question.  As  I  recall 
your  question,  it  was  whether  any  commitment  was  discussed.  Wasn't 
that  it? 

Mr.  Weitz.  Yes. 

Mr.  Hanman.  No,  there  wasn't  any  commitment. 

Mr.  AVeitz.  Well,  leading  back  to  that,  did  anyone  discuss  with  you 
their  interest  in  making  such  a  commitment,  or  at  least  whether  or 
not  there  was  a  commitment  that  they  woidd,  in  fact,  try  to  make  sub- 
stantial contrib)itions  to  the  President's  reelection? 

Mr.  Hanman.  Well,  again,  I  would  have  to  say  that  there  were  dis- 
cussions, I  am  sure,  between  people  in  AJNIPI,  people  in  Mid- Am,  me 
included,  relative  to  the  job  that  the  President  was  doing;  and  I'm 
sure  we  had  talked  about  possible  contributions  to  this  reelection  ef- 
fort. As  to  a  commitment,  I  heard  none  from  them,,  and  I  made  none 
to  themi. 

Mr.  Weitz.  Did  tliey  ask  you  to  make  a  commitment  of  any  sort? 

Mr.  Hanman.  Not  tnat  I  recall. 

Mr.  Weitz.  Did  they  discuss  any  amounts  that  they  hoped  they 
could  make,  or  you  could  make,  or  in  fact  the  principal  dairy  co-ops 
together  could  make  over  a  period  of  time  to  the  President's  reelection  ? 

Mr.  Hanman.  No.  I  couldn't  testify  to  tliat.  In  the  early  days  of  the 
political  action  program  tiieie  were  some  discussions,  I  am  sure,  rela- 
tive to  what  our  potential  might  be  as  far  as  incbme,  and  as  to  how 
you  mijrht  divide  these  incomes  between  congressional  races,  senatorial 
laces,  Presidential  race. 

Mr,  Weitz.  AVliat  about  the  relative  size  of  contributions  between 
the  three  co-ops,  or  I  should  say  their  political  action  trusts?  For  ex- 
ample, did  you  ever  discuss  with  any  representatives  of  AMPI  that  if 
they  would  make  a  contribution  of  so  much,  yours  would  be  perhaps 
half  as  much,  or  a  certain  percentage  of  their  contribution  to  the 
President's  reelection? 

Mr.  Hanman.  Well,  I'm  not  sure  whether  it  was  on  the  President's 
reelection,  but  there  have  been  occasions  when  some  individual  running 
for  public  office 


5868 

s  ffo  off  the  rec( 

[Discussion  oj9l  tiie  record.] 

Senator  Montoya.  Now,  I  might  ask  you  or  your  attorney  if  Mid- 
America  Dairymen,  Inc.,  is  a  corporation  in  the  ordinary  sense  of  the 
term;  and  if  so,  under  what  laws  was  it  organized? 

Mr.  Hanman.  I'll  let  my  legal  counsel  answer  that. 

Senator  Montoya.  Yes. 

Mr.  Gage.  Mid-America  Dairymen  is  a  corporation,  incorporated 
under  the  laws  of  the  State  of  Kansas  as  a  cooperative  marketing 
association  under  the  Cooperative  Marketing  Act  of  Kansas.  As  such, 
it  is  qualified  to  engage  in  business  in  Texas,  Oklahoma,  Arkansas, 
Missouri,  Illinois,  Wisconsin,  Iowa,  Minnesota,  South  Dakota, 
Nebraska. 

Mr.  Hanman.  Wisconsin. 

Mr.  Gage.  Wisconsin.  And  it  has  producer  members  in  each  of  those 
States. 

Mr.  Hanman.  We  do  have  a  few  members  in  Wyoming,  and  I  believe 
a  few  in  Oklahoma,  Did  you  mention 

Mr.  Gage.  I  think  Mid-America  is  also  qualified  in  Wyoming. 

Mr.  Hanman.  Did  you  mention  Texas? 

Mr.  Gage.  Yes. 

Senator  Montoya.  Have  you  had  any  court  tests  as  to  whether  or 
not  under  this  law  and  the  organization  pursuant  thereto,  the  organi- 
zation is  subject  to  the  status  of  having  complete  entity  to  sue  and  to  be 
sued  in  the  corporate  name? 

Mr.  Gage.  Yes,  Senator,  I  think  there  is  no  question  but  that  it  is  a 
corporate  entity  and  may  sue  and  be  used  as  such. 

Senator  Montoya.  What  about  liability?  Is  it  distributed  to  the 
members,  or  is  it  the  nature  of  the  normal  corporation? 

Mr.  Gage.  It's  in  the  nature  of  the  normal  corporation. 

Senator  Montoya.  All  right. 

Mr.  Weitz.  And  I  understand  in  that  regard,  you  have  in  iact, 
received  legal  advice  that  under  the  prior  law,  the  Corrupt  Practices 
Act,  it  would  have  been  a  violation  of  that  law  for  Mid- America  to 
make  political  contributions  of  its  corporate  funds. 

Mr.  Hanman.  That's  right. 

Senator  Montoya.  All  right. 

Mr.  Weptz.  Now,  with  regard  to  the  activity,  the  time  period  at 
the  close  of  1970,  your  testimony  is  that  at  no  time  do  you  recall  any 
discussions  either  with  representatives  of  AMPI,  with  their  counsel, 
with  regard  to  a  commitment  of  funds  of  contributions  to  the  Presi- 
dent's reelection? 

Mr.  Hanman.  With  respect  to  commitment  of  a  certain  amount? 

Mr.  Weitz.  Yes. 

Mr.  Hantvian.  No. 

Mr.  Weitz,  Or  a  commitment  without  a  specific  amount? 

Mr.  Hanman,  Well,  I  don't  know  what  you  mean  by  a  comm.itment. 

Mr.  Weitz.  Did  you  ever  bear  them,  or  did  they  ever  discuss  in 
your  presence  the  fact  that  some  commitment  either  was  going  to  be 
made  or  had  in  fact  been  made  to  certain  representatives  of  the 
administration? 

Mr.  Hanman.  1  did  not  know.  I  did  not  ever  hear  them  say  that 
they  had  made  a  commitment.  I  am  sure  that  in  late  1970  and  early 


5869 

1971,  both  of  us  were  thinking  in  terms  of  contributing  to  Mr.  Nixons' 
reelection  effort  because  we  thought  he  was  doing  a  hell  of  a  good  job. 

Mr.  Weitz.  Did  you  discuss  this  with  members  of  the  ADEPT 
committee? 

Mr.  Hanman.  Yes. 

Mr.  Weitz.  And  in  your  discussions  with  them  did  you  either  recom- 
mend or  discuss  a  certain  amount  which  you  thought  over  a  period, 
perhaps  of  2  years,  would  be  made  to  the  President's  reelection? 

Mr.  Hanman.  Not  that  1  recall,  any  specific  amount.  As  you  know, 
the  records  will  show  we  made  some  contributions  to  committees.  Later 
on  we  made  some  more  contributions  to  some  other  committees.  And 
I  think  we  kind  of  played  it  by  ear  as  we  went  along.  But  1  ^on't  know 
of  any  early  decision  on  amount. 

Mr.  Weitz.  Now,  turning  to  the  decision,  milk  price  support  decision, 
in  March  of  1971,  before  the  first  decision  by  the  Secretary  of  Agri- 
culture on  March  12,  were  you  involved  in  contacting  members  of 
either  the  administration  or  Congress  to  lobby  for  higher  price  support 
level  ? 

Mr.  Hanman.  Yes. 

Mr.  Weitz.  Who  in  the  Department  of  Agriculture  did  you  contact 
or  meet  with  ? 

Mr.  Gage.  Excuse  me,  Mr.  Weitz,  I  think  that  you  might  give  Mr. 
Hanman  a  little  more  time  on  his  answer^.  There  are  some  of  these 
questions  that  he  might,  in  order  to  present  a  full,  correct  picture,  want 
tx)  explain  just  a  little  more. 

Mr.  Weitz.  I'm  sorry  if  I  gave  the  impression  I  was  rushing  the 
witness. 

Mr.  Gage.  All  right. 

Mr.  Hanman.  With  respect  to  price  supports 

Mr.  Weitz.  Yes. 

Mr.  Hanman.  Under  the  terms  of  the  1949  law,  the  Secretary  of 
Agriculture  is  required  to  make  a  decision  sometime  before  April  1, 
what  level  of  milk  prices  he  intends  to  support  for  the  next  marketing 
year.  Under  the  terms  of  that  law,  marketing  year  is  April  1  through 
March  31;  and  he  has  an  administrative  leeway  between  75  and  90 
percent  of  parity  to  set  that  level.  He  has  to  make  that  determination 
annually,  and  so  he  starts  generally  in  the  Department  of  Agriculture 
to  gather  data  and  facts  on  what  he  estimates  production  will  be,  what 
thej'  estimate  consumption  will  be,  what  imports  might  be,  what  ex- 
ports might  be ;  so  that  they  can  make  an  educated  guess  as  to  what 
Government  stocks  might  be,  and  what  Government  costs  would  be. 

The  now  famous  1971  activity  was  preceded,  I  think  we  should  men- 
tion, by  similar  activity  starting  back  ever  since  I  can  remember,  to 
1964  when  I  became  involved  in  dairy  co-ops ;  because  this  was  an  an- 
nual decision  that  had  to  be  made. 

So  we  had,  starting  in  about  1964  or  1965,  a  concerted  collective 
activity  on  the  part  of  all  dairy  co-ops  to  present  the  facts  of  milk  pro- 
duction and  sales  as  we  saw  them.  And  I  believe  starting  in  1968, 
maybe  1967,  we  prepared  some  joint  position  papers  on  milk  produc- 
tion, sales,  exports,  imports.  Government  cost  and  so  forth,  to  plead 
our  case,  or  if  we  thought  we  had  a  case,  to  present  this  case  to  any- 
body that  would  listen  to  us. 


10-331   G  -  74  -  2 


5870 

Now,  with  respect  to  the  1971  decision,  starting  in  late  1970,  we 
started  making  some  estimates  oui-selves  on  production  and  sales,  be- 
cause for  the  last  4  years  prior  to  that  time,  USDA's  statisticians  had 
been  wrong.  They  were  overestimating  production  in  1  year  by  as 
much  as  6.1  billion  pounds;  compare  that  to  an  annual  production  of 
125  billion,  sc  they  w^ere  way  off.  They  were  high  on  the  production 
side. 

So  we  started  gathering  data  from  our  own  sources,  from  the  dairy 
co-ops.  We  also  got  some  professors  from  land-grant  universities  in- 
volved, and  they  had  done  some  studies  for  us — this  was  particularly 
true  in  late  1970 — as  to  how  they  saw  the  picture,  demand  and  supply, 
and  what  they  saw  the  costs  to  be  on  dairy  farms  as  it  would  influence 
total  supply. 

And  we  prepared  a  position  paper  in  1971.  We  tested  our  data  with 
about  everybody  in  the  Department  that  had  an  mput. 

Senator  Montoya.  Do  you  have  a  copy  of  that  ^ 

Mr.  Hanman.  Yes. 

Senator  Montoya.  Would  you  submit  it? 

Mr.  Weitz.  These  documents  have  been  submitted  en  masse,  but  I 
do  appreciate  bringing  that  up  and  identifying  the  separate  docu- 
ments. The  record  will  show  that  this  is  a  document  entitled  "The 
Dairy  Industry  and  the  Public  Interest:  The  Need  for  a  Price  Sup- 
port Increase,"  It's  dated  February  24, 1971.  It  is  signed  by  Associated 
Dairymen,  Inc.,  and  it  is  located  in  the  file  marked  "Contacts  with 
administration  officials  in  re:  price  supports." 

Mr,  Hanman.  You  will  also  notice  in  here  that  there  is  a  position 
paper  that  was  prepared  exclusively  by  Mid-Am  people,  and  most 
of  the  data  from  this  paper  were  incorporat-ed  in  this  paper  which 
became  a  joint  paper  of  Associated  Dairymcri.  And  this  pretty  well 
outlined  our  position  on  that  price  support  issue. 

We  tested  our  data  with,  like  I  said,  college  professors.  We  tested 
it  with  people  in  the  Department  of  Agriculture.  I  am  talking  aj^out 
the  professional  people^  people  in  Statistical  Reporting  Service,  and 
the  Agricultural  Marketing  Service.  We  talked  to  people  in  the  Com- 
modity Credit  Corporation  Avhich  buys  surplus  dairy  products,  to 
se«  what  their  stocks  were  and  what  their  costs  were,  and  this  kind 
of  thing. 

And  finally  the  paper  was  presented  by  a  group  of  us  to  Secretary 
Hardin,  and  I  believe  Phil  Campbell  who  was  the  Under  Secretary 
at  the  time  prior  to  their  first  announcement  in  early  March,  pointing 
out  our  position  that  we  didn't  think  production  was  going  to  be  as 
high  as  they  thought  it  was  going  to  be :  pointing  out  that  we  thought 
sales  were  going  to  be  better  than  they  thought  it  was  going  to  be ;  and 
that  the  picture  was  going  to  improve  as  far  as  governmental  costs 
were  concerned. 

Bear  in  mind  also  that  price  supports  had  been  increased  the  year 
before  in  1970. 

So  we  did — yes.  in  response  to  your  ouestion,  we  did  talk  to  the 
people  in  the  Departm.ent  and  make  our  views  known  that  we  wanted 
90  percent  of  parity. 

Mr.  Weitz.  For  the  record,  the  second  d<>cument  referred  to  is  en- 
titled "Justification  for  Increasing  Price  Supports  to  90  Percent  of 


5871 

Parity."  It  is  dated  February  17,  1971,  and  prepared  by  Lonnie 
SpurgeoR,  research  economist  for  Mid- America  Dairymen,  Inc. 

Mr.  Hanman.  Incidentally,  he  is  a  Ph.  D.  in  agriculture  economics. 

Mr.  Weitz.  Did  this  analysis  include  recognition  of  problems  with 
regard  to  rising  costs — feed  costs  particularly — of  dairy  farmers? 

Mr.  Hanman.  Yes,  right. 

Mr.  Weitz.  Now,  you  say  you  met  with  Secretary  Hardin  and 
Under  Secretary  Campbell  sometime  in  early  March  before  the  first 
decision  was  announced. 

Mr.  Hanman.  Yes. 

Mr.  Weitz.  What  was  their  initial  response  ? 

Mr.  Hanman.  I  guess  generally  they  were  receptive.  By  receptive 
I  mean  they  were  cordial.  Bear  in  mind  that  we  were  presenting 
some  facts  and  data  to  them  which  was  slightly  contrary  to  what  they 
were  getting  from  their  own  Department  at  the  time,  because  we 
were  sajdng  some  of  their  numbers  were  wrong  and  ours  were  right, 
and  we  were  basing  this  on  historical  experience  that  we  had  that 
tliey  had  been  overestimating  production  supply  response. 

So  I  couldn't  really  tell  you  what  their  response  was  other  than 
they  listened.  They  said  they  would  consider  it,  and  they  expected  to 
have  an  early  announcement. 

One  other  time  we  criticized  the  administration  for  a  late  announce- 
ment. In  other  words,  the  price  changes  under  price  support,  if  they 
were  going  to  make  any,  would  be  effective  on  April  1,  and  in  order 
to  allow  the  industry  to  adjust  to  these  new  prices,  we  wanted  some 
leadtime. 

Senator  Montoya.  Who  met  with  Hardin  and  Campbell? 

Mr.  Hanman.  Myself,  Harold  Nelson,  Dave  Parr. 

Senator  Montoya.  Identify  their  associations. 

Mr.  Hanman.  Myself,  I  was  with  Mid- America  Dairymen.  The  last 
two  I  mentioned  were  with  Associated  Milk  Producers.  I  believe  Joe 
Westwater  was  there  from  Dairymen,  Inc.  Perhaps  George  Mehren, 
I'm  not  sure  if  he 

Senator  Montoya.  How  do  you  spell  that  ? 

Mr.  Hanman.  M-e-h-r-e-n. 

Mr.  Weitz.  He  was  also  affiliated  with  AMPI  at  the  time? 

Mr.  Hanman.  Yes;  and  an  ex- Assistant  Secretar^'^  of  Agriculture 
under  Freeman. 

Mr.  Weitz.  Do  you  feel  that  before  the  first  decision  these  papers 
and  your  presentations  fairly  presented  the  arguments  and  facts  as 
you  understood  them  ? 

Mr.  Hanman.  Oh,  yes. 

Mr.  Weitz.  Can  you  then  explain  why  the  first  decision  was  that 
there  would  be  no  increase  in  price  support  level  ? 

Mr.  Hanman.  At  the  time  I  couldn't,  but  I  think  since  that  time 
inaybe  I  can  shed  some  lisrht  on  it.  Bear  in  mind  that  during  this  ac- 
tivity I  Avas  spending  quite  a  bit  of  time  in  Washington,  and  I  was 
getting  some  general  feedback  from  newspeople  and  some  congres- 
sional sources  maybe  that  the  Department  was  looking  favorably  on 
our  i-equest — I'm  talking  about  the  Department  of  Agriculture. 

And  since  that  time  and  lust  recently  I  haA^e  noticed  some  press 
stories  where  Secretary  Hardin  has  said  that  they  originally  sent  to  the 
White  House  a  request  to  increase  price  supports.  And  I  visited  the 


5872 

otlier  day  with  Bill  Knox,  K-n-o-x,  who  is  editor  of  Ford's  Dairy- 
men— it's  a  national  dairy  magazine — who  was  with  Secretary  Hardm 
in  early  March,  Secretary  Hardin  made  a  speech  at  our  annual  meet- 
ing, I  believe,  on  March  4,  in  Kansas  City.  And  Bill  told  me  that  during 
his  trip — he  was  with  him  in  Des  Moines,  and  they  flew  to  Kansas  City 
for  our  meeting — but  during  that  trip  he  got  the  impression  from  the 
Secretary  that  he  was  favorably  inclined  to  increasing  price  supports, 
but  that  maybe  he  was  being  blocked  somewhere  in  the  White  House 
from  doing  it. 

And  so,  Bill  Knox  reported  that  he  had  advised  Secretary  Hardin 
that  he  heard  a  rumor  that  George  Shultz,  who  was  then  Bureau  of  the 
Budget  Director,  was  not  opposed  to  the  price  support  increase.  And 
before  he  made  his  speech  at  our  annual  meeting,  one  of  his  aides  called 
Shultz'  office  to  see  whether  or  not  in  fact  he  was  not  opposed ;  and  he 
reijponded  back  to  Bill  that  somebody  is  playmg  games  with  him.  And, 
he  left  the  impression  that  Shuitz  had  not  changed  his  mind. 

Mr  .Weitz.  And  that  Shultz  was  m  fact  opposed  ? 

Mr.  Hakman.  Yes. 

Mr.  Weitz.  Are  you  aware  that  Secretary  Hardin  has  never  said 
publicly,  to  the  best  of  my  knowledge,  whether  or  not  Secretary  Shultz 
was  opposed  or  in  favor  of  the  price  support  decision  before  it  was 
publicly  announced  on  March  12  ? 

Mr,  Hanma?^.  I  am  aware  of  it,  and  I  probably  was  in  error  mention- 
ing a  newspaper  report,  because  sometimes  I  get  things  a  little  jumbled 
up.  But  I  certainly  did  have  the  impression  from  this  discussion  with 
Bill  Knox,  of  Ford's  Dairymen,  who  accompanied  the  Secretary,  that 
he  was  favorably  inclined  to  increase. 

Mr.  Weitz.  Now,  after  the  first  price  support  decision  on  March  12 
and  the  second  price  support  decision  publicly  announced  on  March  25, 
do  you  know  of  any  facts  with  regard  to  the  problem  of  milk  price 
supports  that  were  either  made  known — that  you  made  known  or  were 
made  known  to  the  Secretary  which  would  have  led  him  to  change  his 
decision  ? 

Mr.  Hanman.  Well,  I  think  after  the  decision  was  announced,  a 
group  of  our  economists — and  I  believe  Dr.  Lonnie  Spurgeon  was  one 
of  them — as  well  as  some  economists  from  the  other  dairy  groups,  DI 
and  AMPI,  met  with  some  of  the  people  in  the  Department  connected 
with  the  data.  And  I'm  not  sure  whether  it  was  Dr.  Paarlberg  or  who, 
but  we  made  another  attempt  after  that  decision  was  announced  to 
show  them  where  their  numbers  were  in  error  and  to  point  out  some 
additional  data  to  them. 

The  thing  that  was  concerning  us  at  the  time  was  costs  on  the  farm 
were  escalating  rapidly,  particularly  feed  costs;  and  we  just  couldn't 
see  how  we  were  going  to  (r&t  an  increase  in  production  w^ith  those  costs 
going  up  at  the  farm,  and  with  the  number  of  milk  cows  that  we  knew 
were  there,  and  the  replacement  heifers:  we  just  didn't  see  how  we 
were  going  to  get  an  increase  in  milk  production,  which  was  what  the 
type  of  data  coming  out  of  USDA  was ;  that  it  was  going  to  continue 
to  e:o  up. 

Mr.  W^EiTZ.  Was  this  information  available  to  you,  and  did  you  in 
fact  utilize  some  of  it  before  the  12th? 

Or  let  me  turn  it  around.  Do  you  know  of  any  new  data  that  you 
either  have  or  could  locate  that  was  available  to  vou  after  the  12th  that 
was  not  available  to  you  beforehand,  and  which  you  had  not  utilized? 


5873 

Mr=  Hanman.  Not  that  I  recall. 

Mr.  Weitz.  Hadn't  feed  costs  in  fact  been  increasing  rapidly  all 
through  the  fall  in  1970? 

Didn't  you  and  others  bring  that  to  the  attention  of  the  people  in 
the  Department  before  the  12th  ? 

Mr.  Hanman.  I  can't  testify.  I  think  this  report  would  probably 
show  that. 

Senator  Montoya.  Well,  you  would  cover  projection  of  feed  costs 
on  the  historical  basis,  wouldn't  you,  for  the  year? 

Mr.  Hanman.  Generally  that  would  be  true,  with  an  added  input 
based  on  what  current  supply  was. 

Senator  Montoya.  The  trend  was 

Mr.  Hanman.  Yes. 

Senator  Montoya.  Based  on  the  trend. 

Mr.  Hanman.  Yes.  In  other  words,  you  might  have  an  adequate 
supply  at  the  time  and  then  you  would  come  into  a  fall.  This  was 
the  fall  of  1970,  the  winter  of  1971  we  are  talking  about.  And  if  the 
harvest  was  bad  or  if  the  stocks  of  grains — grain  stocks  were  down  and 
demand  was  high,  I  think  you  could  project  at  that  time  that  feed 
costs  would  escalate  more  than  they  would  under  a  normal  set  of  cir- 
cumstances. But  I  don't  know  whether  that  was  the  case  or  not. 

Senator  Montoya.  That's  usually  when  the  ingredients  in  a  report 
like  that  are  presented  to  the  Department  of  Agriculture  in  rebuttal 
to  their  position,  isn't  it? 

Mr.  Hanman.  Yes. 

Mr.  WErrz.  Now,  during 

Senator  Montoya.  Just  a  minute. 

Let's  see  if  he  did  that. 

Mr.  Weitz.  I'm  sorry. 

Mr.  Hanman.  This  data  goes  through  January  of  1971,  and  I  believe 
those  costs,  I  believe  there  would  be  more  current  data  available  at 
the  time  they  would  make  that  decision. 

Mr.  Weitz.  Do  you  have  a  copy  of  any  such  data  that  you  may  have 
submitted  to  the  Department  ? 

Mr.  Hanman.  No,  I  don't  believe  we  do. 

Senator  Montoya.  Just  a  minute. 

Doesn't  it  stand  to  reason  that  when  you  bring  your  data  up  to  date, 
say  up  to  January,  which  is  the  termination  date  of  assembling  data, 
doesn't  that  take  into  consideration  the  projection  of  costs,  at  least 
at  the  same  rate  as  the  previous  year  ? 

Mr.  Hanman.  Yes,  it  would. 

Senator  Montoya.  And  you  include  that  as  the  final  ingredient  for 
consideration,  do  you  not? 

Mr.  Hanman.  Yes.  Yes,  you  would. 

Senator  Montoya.  And  do  you  think  you  did  that? 

Mr.  Hanman.  I'm  sure  we  did. 

Senator  Montoya.  All  right. 

Now,  on  March  12,  there  was  a  price  support  decision  rendered  by 
the  Secretary  of  Agriculture,  turning  down  any  increase  in  price 
supports.  Correct? 

Mr.  Hanman.  That  is  correct. 

Senator  Montoya.  And  then  lie  reversed  himself  on  March  25? 

Mr.  Hanman.  That  is  correct. 


5874 

Senator  Montoya.  Now,  did  you  submit  in  writing,  any  additional 
data  which  might  either  complement  your  January  1  figures  on  cost 
of  production,  production,  and  imports,  exports  and  consumption  ? 

Mr,  Hanman.  I  don't  believe  we  did,  Senator. 

Senator  Montota.  You  didn't  ? 

Mr.  Hanman.  I  don't  believe  we  did. 

Senator  Montoya.  So  you  just  tried  to  prevail  upon  him  to  change 
his  mind,  is  that  it? 

Mr.  Hanman.  Between  March  12  and  March  25? 

Senator  Montoya.  Yes. 

Mr.  Hanman.  Well,  actuallj'^,  what  we  did,  Senator,  was  that  we 
assumed  at  that  time  that,  as  far  as  the  Secretary  of  Agriculture  was 
concerned,  that  we  had  been  turned  down.  And  so  the  only  avenue  we 
had  left,  then,  was  to  go  to  some  of  our  friends  in  Congress  and  the 
Senate,  and  to  present  the  same  data  to  them  and  try  to  convince  them 
the  price  supports  should  be  increased. 

And  at  that  time,  the  only  way  we  saw  we  could  do  that  was  by 
amending  the  1949  law  which  gave  the  administration  the  adminis 
trative  leeway  to  change  price  supports  between  75  and  90  percent.  So 
we  went  back  to  some  of  our  friends  in  Congress  and  the  Senate  and 
we  asked  them  to  help  us  legislate  a  change  in  that  1949  law  to  move, 
by  legislation,  the  support  from  75  to  85  percent  of  parity. 

Senator  Montoya,  But  the  Congress  didn't  do  that  between  March 
4  and  March  12,  did  it  ? 

Mr.  Hanman.  No.  Between  March  12  and  March 

Senator  Montoya.  I  mean  March  12  and  March  25. 

Mr.  Hanman.  No.  Between  that  period  of  time,  we  had,  I  think, 
about  130  U.S.  Congressmen  and  about  29  Senators  who  had  agreed 
to  sponsor  or  cosponsor  or  support  this  type  of  legislation. 

Senator  Montoya.  Now,  who  devised  the  strategy  that  you  go  to 
the  Congress  and  get  as  many  signatures  on  the  legislation 

Mr.  Hanman.  I  guess  all  of  us  who  were  involved.  I  am  talking 
about  myself,  our  board,  Mid-Am  board,  the  staff  of  AMPI,  the  staff 
of  DI.  We  are  also  members  of  the  National  Milk  Producers  Federation 
here  in  Washington. 

Senator  Montoya.  And  was  there  any  discussion  during  these 
strategy  sessions  that  one  of  the  objectives  to  get  this  wide  support  in 
the  Congress  was  to  try  to  preA^ail  upon  the  administration  to  make  an 
administrative  change  in  the  decision  ? 

Mr.  Hanman.  Oh,  yes.  I  am  sure  that  was  a  part  of  the  strategy. 

Senator  Montoya.  All  right. 

Now,  what  other  moves  did  you  make  with  the  executive  department? 

You  went  to  the  Secretary  of  xVgriculture ;  you  talked  to  Mr.  Camp- 
bell, also.  Did  you  visit  with  anyone  at  the  White  House? 

Mr.  Hanman.  Yes.  On,  I  believe  it  was  the  23d  of  March — you've 
probably  got  the  records  on  it — on  the  23d  of  March,  a  group  of  us 
met  with  the  President. 

Senator  Mo>rTOYA.  All  right. 

Who  was  in  that  group  ? 

Mr.  Hanman.  All  right. 

I  am  not  sure  I  can  name  them  all,  but  there  was  myself,  and  Mid- 
Am's  general  manager,  Wes  Johnson,  and  our  president,  Bill  Powell, 
the  three  men  from  Mid-Am.  There  was  Dave  Parr  and  Harold  Nel- 
son, and  I  believe 


5875 

Senator  Montota.  Who  are  they  with  ? 

Mr.  Hanman.  They  are  with  AMPI. 

Senator  Montoya.  All  right. 

Mr.  Hanman.  I  believe  their  president,  John  Butterbrodt.  There  was 
John  Moser,  who  is  the  president  of  DI ;  their  executive  director,  they 
call  him,  the  same  as  our  general  manager,  Paul  Alagia.  There  was  Paul 
Affeldt,  and  William  Eckles,  who  are  the  manager  and  president  of 
Pure  Milk  Products  Cooperatives  in  Fond  du  Lac,  Wis.,  were  there, 
too.  I  believe  that's  all  I  can  recall  from  the  dairy  farmers'  side  who 
were  there. 

On  the  administration  side,  the  Pr^ident  was  there.  The  Secretary 
of  Agriculture  was  there,  Hardin ;  Under  Secretary  Phil  Campbell  ; 
the  Assistant  Secretary,  Richard  Lyng;  George  Shultz  was  there;  and 
there  were  some  aides.  I  think  there  were  some  aides  from  USDA  and 
some  White  House  aides  there,  but  I  don't  know  who  they  were. 

Mr.  Weitz.  Wasn't  Secretary  Connally  also  there? 

Mr.  Hanman.  I  don't  believe  he  was. 

Senator  Montoya.  Are  you  sure  ? 

Mr.  Hanman.  I  am  almost  positive  he  wasn't  there,  sir. 

Senator  Montoya.  "Wlio  arranged  for  the  meeting  ? 

Mr.  Hanman.  As  I  recall,  the  meeting  was  set  up  by  AMPI  people, 
Associated  Milk  Producers. 

Senator  Montoya.  You  don't  know  who? 

Mr.  Hanman.  No,  I  don't  know  who. 

Senator  Montoya.  Was  Secretary  Connally  in  the  picture  as  at- 
torney or  counselor  ? 

Mr.  Hanman.  I  don't  believe  he  was. 

Senator  Montoya.  Was  his  name  ever  discussed  ? 

Mr.  Hanman.  I  would  assume  that  his  name  did  come  up  in  our  dis- 
cussions during  strategy  sessions,  because  some  of  the  people  in  Texas 
were  friends  of  Secretary  Connally. 

Senator  Montoya.  Do  you  know  whether  he  represented  any  of  the 
associations  in  Texas  that  were  affiliated  with  the  national  association? 

Mr.  Hanman.  Not  to  my  knowledge. 

Senator  Montoya.  But  you  did  hear  some  discussion  among  the 
Texas  people  ? 

Mr.  Hanman.  Well,  when  I  say  that.  Senator,  you  must  remember 
that  between  March  12  and  March  25  the  decision  about  all  dairy 
groups  of  any  size  throughout  the  country  were  in  here,  had  brought 
their  people  in,  talking  to  Senators  and  Congressmen,  whoever  would 
listen  to  us,  working  for  a  change  in  the  price  support.  It  was  not  to 
be  effective  until  the  1st  of  April,  so  we  still  had  hopes  that  we  could 
get  it  changed. 

I  know  in  Mid-Am's  case,  we  brought  in  dairy  farmers  from  Con- 
gressmen and  Senators'  home  districts  to  visit  with  th^ir  Senators  and 
Congressmen  about  the  need  for  price  support  increase.  I  think  -we 
brought,  maybe,  in  two  different  time  frames,  that  we  brought  them 
in  to  talk  to  people,  and  other  dairj^  co-ops  were  doing  the  same  thing. 
Michigan  Milk  Producers'  Land  O'Lakes  was  in  here  on  the  other 
side ;  they  were  lobbying  against  it. 

Senator  Montoya.  About  what  time  was  this  ? 

Mr.  Hanman.  This  would  be  probably  the  first  week  after  the 
March  12  decision  that  we  were  back  in  here,  whenever  that  would  be. 


5876 

Senator  Montoya.  Did  you  have  any  indication  from  people  in  the 
Department  of  Agriculture  or  from  people  in  the  White  House  that 
you  should  do  this  to  try  to  create  a  favorable  atmosphere,  in  case 
the  administration  would  want  to  change  the  administrative  decision 
of  the  Secretary  of  Agriculture  ? 

Mr.  Hanman.  No;  we  had  some  advice  and  counsel  from  some 
Congressmen  and  Senators  to  the  effect  that,  "I  will  support  you  in  your 
effort,  and  this  will  add  pressure  to  the  administration  if  they  want  to 
change  their  mind." 

I  think  we  have  got  some  letters  to  that  effect,  sir. 

Mr.  Gage.  There ^s  a  large  number  of  letters  that 

Senator  Montoya.  From  the  Congressmen  'i 

Mr.  Gage.  That  the  Congressmen  wrote  either  to  Secretary  Hardin 
or  to  the  President. 

Senator  Montoya.  The  point  I  am  trying  to  elicit  from  you  is,  did 
you,  in  your  strategy  sessions,  evolve  a  strategy  which  called  for  the 
contacting  of  Congressmen  and  mustering  of  grassroots  support  from 
the  industry  so  as  to  create  more  or  less  an  influence  factor  on  the  Presi- 
dent prior  to  your  meeting  with  the  President  on  March  23,  or  when- 
ever it  was  ? 

Mr.  Hanman.  I  would  say,  generally,  our  strategy  was  probably 
twofold.  I  would  not  deny  that  part  of  the  strategy  was  to  put  the 
pressTire  on  the  administration  from  all  of  us  that  were  dealing  with 
the  Congress  and  the  Senate.  But  we  fully  intended — and  that  may 
sound  naive  and  unattainable — but  we  fully  felt  like  we  could  pass 
that  legislation.  We  didn't  know  whether  the  President  would  veto 
it  or  not.  The  chances  are  he  would  if  he  was  dug  in,  and  he  wasn't 
going  to  change  it.  He  would  probably  veto  it. 

But  we  were  getting  advice  and  counsel  from  Congressmen :  "let's 
try  it,  let's  go,  I  think  we  can  pass  it."  And  so  I  think  probably  our 
strategy  was  twofold.  One  was  that  we  could  keep  the  pressure  on  them, 
and  the  other  thing  was,  well,  you  don't  know  until  you  try,  we  might 
be  able  to  pass  it. 

Senator  Montoya.  All  right. 

Wliat  did  you — who  was  the  spokesman  before  the  President? 

Mr.  Hanman.  I  think,  generally — I  think  there  was  an  opening 
statement,  maybe  by  Harold  Nelson,  and  maybe  a  response  by  the 
President.  But  from  there  on,  I  think  all  of  us  pretty  well  chimed  in 
in  the  discussion  with  the  President  on  the  price  support  issue. 

Senator  Montoya.  And  who  was  the  coordinator  for  the  President 
in  this,  for  the  White  House  ? 

Mr.  Hanman.  Well,  as  T  recall,  he  did  a  lot  of  the  talking  himself, 
the  President  himself.  Secretary  Hardin  supported  his  position. 

Senator  Montoya.  His  previous  position  ? 

Ml'.  Hanman.  Yes,  he  did.  And  Phil  Campbell  was  there,  and  he 
made  some  comments.  And.  as  T  recjill.  Phi^  Campbell's  commen+^s  were 
alonsr  the  lines  that,  we  are  fearful  that  «  price  support  at  tlvis  time 
would  be  a  repeat  of  what  Secretary  Freeman  did.  I  believe,  in  1^62. 
when  he  increased  milk  nrice  supports,  supply  responded,  and  the 
Government's  costs  went  up. 

And  so  there  Avas  nn  exchange  between  the  dairy  farmers  and  tlieir 
representatives  and  Campbell  and  Hardin  and  the  PresidoTit.  T  don't 
believe  Secretary  Shultz  said  anything. 


5877 

Pointing  out  how  the  things  were  different  in  1971  than  what  they 
were  in  1962,  we  pointed  out  that  we  had  some  new  authority  under  a 
recently  passed  law — I  don't  know  what  the  date  was,  1960  or  1970 — 
whereby  we  could  put  in  class  1  base  plans  in  our  Federal  milk  orders, 
which  would  design  the  supply  to  the  sale.  There  was  a  technicjue 
whereby  milk  producers  would  be  assigned  bases,  and  their  production 
would  be  tailored  to  the  needs  of  the  market,  based  on  allocation  of 
bases  for  higher  prices. 

We  pointed  out  we  had  new  authority  for  promotion.  The  dairy  in- 
dustry for  40  years  probably  has  been  self-supporting — a  generic-type 
advertising  program.  And  under  the  terms  of  this  new  legislation,  we 
could  amend  our  Federal  milk  orders  to  where,  if  two-thirds  of  the  pro- 
ducers approved,  all  would  pay  to  support  this  advertising  program. 
We  thought  we  could  get  a  lot  more  money  from  promotion  which 
would  stimulate  sales,  we  thought. 

Senator  Montoya.  Increase  the  cost  of  production  but  also  increase 
the  sales  through  advertising  ? 

Mr.  Hanman.  Yes.  Yes,  that's  what  we  were  doing,  Senator,  what 
we  were  aiming  at. 

Senator  Montoya.  Yes. 

Mr.  Hanman.  We  also  pointed  out  that  the  dairy  industry,  as  far  as 
the  production  side,  the  dairy  farmers  themselves,  was  being  restruc- 
tured, starting  in  1967  and  1968.  The  mergers  were  going  on,  whereby 
the  smaller  co-ops  were  being  merged  into  larger  effective  oo-ops,  and 
we  could  better  tailor  supply  to  market  needs.  We  could  put  in  bigger 
and  more  efficient  plants. 

We  were  trying  to  make  the  case,  I  think,  that  the  conditions  at  that 
time,  in  1971,  were  not  the  same  as  they  were  in  1962. 

Senator  Montoya.  But  that  there  was  more  merit  in  1971  than  there 
was  in 


Mr.  Hanman.  1962. 

Senator  Montoya.  Yes. 

Mr.  Hanman.  Yes,  that's  right. 

Senator  Montoya.  All  right. 

What  was  the  reaction  of  the  President  after  he  heard  Hardin  and 
after  he  heard  Campbell  and  heard  your  people  ? 

Mr.  Hanman.  I  thought  it  was  good.  I  came  away 

Senator  Montoya.  What  did  he  indicate  ? 

Mr.  Hanman.  He  didn't  indicate  anything,  really,  when  we  left,  you 
know,  whether  he  was  going  to  do  anything ;  but  I  was  amazed  at  his 
knowledge  of  the  industry,  I  will  say  that.  And  as  we  would  bring  out 
these  new  points,  the  restructuring  of  the  new  promotion,  class  1  base, 
he  would  say — ^he  said  on  one  occasion,  I  know,  "Secretary  Hardin,  that 
is  different  than  what  we  had  then,'' 

W^e  did  not  in  any  way  imply  or  leave  the  impression  that  he  was 
going  to  change  it.  But  I  would  sa}^  we  were  favorably  impressed  with 
his  knowledge  and  with  the  reception  that  we  got. 

Senator  Montoya.  Had  anyone  else  met  with  the  President  on  behalf 
of  your  group  before  this  meeting  ? 

Mr.  Hanman.  Not  to  my  knowledge.  I  understand  that  in  late  1970 
maybe,  that  there  Avas  a  meeting  with  the  President  between  Dave  Parr 
and  Harold  Nelson,  but  I  couldn't  testify  that  that  meeting  did  take 
place. 


5878 

Senator  Montoya.  Where  did  you  hear  that  ? 

Mr.  Hanman.  I  believe  I  heard  that  from  Mr.  Parr. 

Senator  Montoya.  That  they  had  met  with  the  President? 

Mr.  Hanman.  They  had  met  witli  him  before. 

Senator  Montoya.  At  the  White  House  ? 

Mr.  Hanman.  I  don't  know  where  it  was,  but  he  was  supposed  to 
have  been  a  guest  speaker,  I  believe,  at  their  1970  annual  meeting,  and 
he  didn't  come,  so  they  met  with  him  after  that. 

Senator  Montoya.  All  right. 

Now,  when  the  March  25  decision  was  made,  did  the  Secretary  of 
Agriculture  niake  new  findings  to  coincide  with  the  presentation  that 
you  had  made  through  this  analysis  ? 

Mr.  Hanman.  1  believe  the  announcement  he  made.  Senator,  was  to 
the  effect  that  they  had  taken  a  look  at  cost  data. 

Senator  Montoya.  Y  es. 

Mr.  Hanman.  And  based  on  their  new  analysis  of  cost  data  that  they 
had  decided  that  they  ought  to  increase  it. 

Now,  let  me  esplain  this,  if  I  could.  When  we  say  increase,  what  we 
are  talking  about  is  an  increase  in  the  per  hundredweight  support, 
moving  it  from  $4.66  to  $4.92  to  $4.93,  27  cents  a  hundredweight.  But 
as  far  as  dairy  farmers  are  concerned,  net,  that  increase  of  27  cents  did 
not  increase  their  net  increase,  because  all  we  were  asking  for,  and  ail 
he  granted,  was  a  restoration,  85  percent  of  parity  in  1971,  that's  the 
same  level  that  was  set  in  1970.  So  what  this  means,  you  see,  is  the 
costs  at  the  farm,  all  costs,  as  measured  by  parity,  had  increased  by  27 
cents  per  hundredweight  in  milk  costs.  And  so  really  the  increase  was 
no  increase  at  all. 

Senator  Montoya.  For  the  farmer  ? 

Mr.  Hanman.  For  the  farmer.  \ 

Senator  Montoya.  Now,  on  the  basis,  using  the  figures  which  you 
presented  to  him  and  which,  presumably,  he  used  in  order  to  change 
his  earlier  determination  of  March  12,  now  that  you  look  back  at  the 
figures  that  were  submitted  by  the  dairy  industry,  were  your  projec- 
tions as  to  cost  of  production,  consumption,  and  imports  and  exports 
correctly  reflected,  or  were  you  shoit  ? 

Mr.  Hanman.  No.  We  Avere  right,  in  that  we  did  export  some  butter ; 
it  was  the  first  time  we  had  been  exporting  butter  in  a  long  time. 

Senator  Montoya.  No  ;  quantitatively,  weie  you 

Mr.  ILvnman,  Yes.  The  Government  costs  were  down,  which  was 
the  basic  argument  in  all  this  that  this  would  increase  costs. 

In  here,  if  I  can  find  that,  is  a  table  showing  what  production  did, 
milk  production.  And  bear  in  mind  that  the  milk  production  side  of 
this  industry  is  a  long  term  thing,  and  the  dairy  farmers  don't  get  in 
and  get  out  very  quick ;  it's  a  long  term  trend. 

The  data  that  was  announced  yesterday  by  USDA  indicate  that 
milk  production  is  down  4.7  percent  last  month  over  the  month  before, 
and  it's  decreasing  in  1973  at  an  i  ncreasing  rate. 

Senator  Montoya.  No;  the  point  I  want  to  make  is,  in  order  to  sus- 
tain a  price  support,  1971  to  1972,  you  had  to  show  increased  produc- 
tion and  increased  consumption  for  1972  ? 
Mr.  Hanman.  That's  right. 

Senator  Montoya.  Now,  did  you  have  increased  production  ? 
Mr,  Hanman.  Let  me  look. 


5879 

Senator  Montoya,  It  doesn't  necessarily  mean  you  had  increased 
production  because  you  had  more  people.  But  what  about  production  ? 

Mr.  Hanman.  Production,  I  believe,  did  come  up  but  it  did  not  come 
up  as  total  consumption  did.  So  the  tight  situation,  the  supply  versus 
sales,  was  tighter  in  1971,  in  1971-72. 

Senator  Montoya.  So  actually,  you  did  not  have  the  sustaining  in- 
gredient for  increasing  the  price  support  ? 

Mr.  Hanman.  Yes;  we  did.  My  point  is  that  even  though  production 
may  have  responded  some,  sales  went  up  more.  And  so  from  a  point  of 
view  of  an  adequate  supply,  long  term  adequate  supply  of  milk,  our 
case,  I  think,  was  justified. 

Senator  Montoya.  Your  case  has  been  sustained  by  the  turn  of  events 
and  the  statistical  data  that  set  in,  is  that  right,  during  the  course  of 
the  year  ? 

Mr.  Hanman.  That's  correct. 

Mr.  Weitz.  Mr.  Hanman,  are  you  aware,  for  example,  that  the  law 
provides  that  the  Secretary  can  increase  price  supports  at  any  time 
during  the  year  ? 

Mr.  Hanman.  Yes,  sir. 

Mr.  Weitz.  Are  you  also  aware  that  the  law  provides  that  once  he 
increases  them,  he  cannot  further  reduce  them  during  the  course  of  a 
milk  marketing  year  ? 

Mr.  Hanman.  Yes;  that  is  my  understanding  of  the  law, 

Mr.  Weitz.  And  yet,  you  have  not  indicated  any  additional  data 
which  you  provided  within  that  12-day  period — that  13-day  period — 
that  would  have  justified  or  provided  any  additional  data  to  justify 
a  change  in  decision  in  so  short  a  time  ? 

Mr.  Hanman.  I  don't  know  that  Mid-Am  presented  any  data  that 
would  change  it,  because  it  was  our  position  before 

Mr.  Wefpz.  That  you  had  justified  it  before? 

Mr.  Hanman.  Yes. 

Mr.  Weitz.  But  nonetheless,  the  Secretary,  for  whatever  reason,  had 
decided  not  to  increase  milk  price  support? 

Mr.  Hanman.  That's  correct. 

Mr.  Weitz.  All  right. 

Now,  during  this  period,  you  indicated  you  were  talking  with — you 
indicated  you  met,  of  course,  with  the  President  and  certain  assistants. 
During  this  period,  were  you  also  meeting  with  other  representatives 
of  the  administration,  other  persons  in  the  White  House? 

Mr.  Hanman.  In  the  White  House  ? 

Mr.  Weitz.  Yes. 

Do  you  recall  meeting  with  anyone? 

Mr.  Hanman.  No;  I  wasn't  in  on  any  meetings  with  anybody  else. 

Mr.  Weitz.  Do  you  know  of  any  meetings  or  any  communication  be- 
tween members  of  the  White  House  and  other  dairy  representatives 
from  A  MPI,  for  example  ? 

Mr.  Hanman.  No  ;  not  that  I  can  testify  to. 

Mr.  Weitz.  During  any  of  this  period  of  time,  did  you  have  any 
contact  or  were  you  aware  of  any  contact  between  the  dairy  repre- 
sentatives and,  for  example,  Mr.  Colson  ? 

Mr.  Hanman.  Not  that  I  recall. 

Mr.  Weitz.  How  about  Mr.  Dent,  Harry  Dent? 

Mr.  Hanman.  Not  that  I  i-ecall. 


5880 

Mr.  Weitz.  Have  you  ever  met  either  of  those  gentlemen? 

Mr.  Hanman.  No. 

Mr.  Weitz.  Did  you  have  an  occasion  to  discuss  any  of  these  mat- 
ters with  Murray  Chotiner  after  he  left  the  White  House  on  March  6, 
1971  ? 

Mr.  Hanman.  I  don't  believe  between  that  period  of  time  I  did. 

Mr.  Weitz.  Were  you  aware  of  whether  any  other  dairy  representa- 
tives were  in  contact  with  any  of  these  people  I  mentioned  including 
Mr=  Chotiner? 

Mr.  Hanman.  I'm  assuming — and  I  guess  maybe  you  shouldn't 
assume — I'm  sure  there  were  contacts  because  he  was  with  the  Harrison 
firm. 

Mr.  Weitz.  Which  represented  AMPI? 

Mr.  Hanman.  Yes, 

Mr.  Weitz.  During  any  of  these  discussions,  or  meetings,  strategy 
sessions,  or  otherwise  m  March  of  1971,  and  particularly  after  the  first 
decision  and  before  the  second  decision,  were  there  any  discussions 
of  political  contributions  by  one  or  more  of  the  trust  arms  of  the 
co-ops  for  the  President's  reelection? 

Mr.  Hanman.  During  this  interim  period  ? 

Mr.  Weitz,  Yes, 

Mr.  Hanman.  Well,  the  only  occasion  when  Mid-Am,  or  when 
ADEPT  would  have  had  an  occasion  to  discuss  it  was  at  the  Re- 
publican kickoif  dinner  that  was  held. 

Was  that  the  i:2d,  23dj  or  24th '^  Somewhere  in  there. 

Senator  Montoya.   In  Chicago? 

Mr.  Hanman.  No;  it  was  here  in  Washington. 

Mr.  Weitz.  Wasn't  this  a  dinner  the  day  after  the  meeting  with  the 
President  ? 

Mr.  Gage.  The  24th,  I  think. 

Mr.  Hanman.  OK.  It  may  have  been. 

Anyway,  on  that  occasion,  the  ADEPT  committee,  the  six  dairy 
farmers  did  come  to  Washington.  We  did  attend  the  Republican  kick- 
off  dinner  that  night,  and  we  did  have  long  discussions  that  evening 
relative  to  the  price  support  issue,  oar  campaign  of  legisJation. 

And  I  don't  know  any  specifics,  but  I  am  sure  contributions  did 
come  up. 

Mr.  Weitz.  Did  you  meet  with  them  privately,  or  did  at  least  some 
of  your  meetings  take  place  with  members  of  the  other  co-ops? 

Mr.  Hanman.  I  would  say  probably  both. 

Mr.  Weitz,  Do  you  remember  meeting  particularly  with  Mr.  Nelson 
or  Mr.  Parr  of  AMPI? 

Mr.  Hanman.  Yes.  I  recall  that  after  we  got  back  from  the  dinner 
that  evening,  we  sat  up  until  the  wee  hours  of  the  morning  talking 
about  price  support,  talking  about  dairy  farmers  involvement  in 
government,  and  jUst  general  philosophizing. 

Senator  Montoya.  What  about  contributions?  You  must  have 

Mr.  Hanman.  I'm  sure  we  talked  about  contributions,  but  I  have 
no  specific  recollection  as  to  what  race  or  what  candidate. 

Senator  Montoya.  Well,  did  you  discuss  any  quotas  ? 

Mr.  Hanman.  Quotas? 

Senator  Montoya.  Yes;  any  amount  that  should  be  contributed  to 
the  reelection  campaign  ? 


5881 

Mr.  Hanman.  I  don't  believe  we  did,  sir. 

Senator  Montoya.  Did  you  at  any  other  time  ? 

Mr,  Hanman.  Yes ;  I'm  sure  there  were  discussions  about  amounts  of 
contributions. 

Senator  Montoya.  Give  us  the  circumstances. 

Mr.  Hanman.  Well,  I  think  the  data,  the  evidence  that  we  brought 
here  would  indicate  that  if 

Senator  Montoya.  Refresh  your  memory  from  that  data,  and  then 
tell  us  just  exactly  what  transpired  with  respect  to  setting  up  amounts 
and  collecting  the  amounts  from  whom,  and  where  wore  they  to  be 
delivered? 

Mr.  Hanman.  Well,  in  August  of  1971,  our  committee  indicated  that 
they  wanted  to  make  some  contributions  to  Mr.  Nixon's  reelection 
effort. 

Senator  Montoya.  '\V1io  did  they  indicate  that  to  ? 

Mr.  Hanman.  To  me,  and  I  got  hold  of — I  believe— Dave  Parr, 
who  said  that  the  Marion  Harrison  firm  could  probably  give  me  some 
names  of  some  committees,  that  there  were  committees  being  set  up 
to  receive  these  funds.  And  I  think  I  called  Marion  Harrison  and  got 
some  names  of  some  committ-ees,  or  had  some  names  of  some  com- 
mittees sent  to  me. 

Also  involved  during  this  period  of  time,  our  committee  looked  at 
not  only  the  Republican  side  of  this  reelection,  or  this  Presidential 
reelection,  but  we  looked  at  the  Democratic  side  as  well.  And  our  rec- 
ords will  show  that  ADEPT  made  during  the  primary,  contributions 
to  Senator  Muslrie  for  $6,000;  Henrv  Jackson,  S4,500;  Fred  Harris, 
$10,000,  to  Humphrey,  $8,300;  and  |l6,600  to  Wilbur  Mills.  All  of 
these  were  contributed  to  their  efforts  during  the  Presidential  race. 

Senator  Montoya.  During  the  primary  ? 

Mr.  Hanman.  Right,  during  the  primary. 

Senator  Montoya.  And  how  much  did  you  contribute  to  Nixon 
during  the  primary  ? 

Mr.  Hanman.  During  the  primary '? 

Mr.  Weitz.  Well,  to  begin  with,  during  1971,  for  example. 

Mr.  Hanman.  During  1971,  the  only — ^those  August  contributions, 
I  think,  were  the  ones  that  went  directly  to  committees  specificallj 
organized  for  Mr.  Nixon's  reelection  effort.  And  I  think  after  the  pri- 
maries were  over  with,  we  made  some  contributions  tx>  Mr.  Nixon's 
efforts  at  that  time. 

Senator  Montoya.  How  much  ? 

Mr.  Hanman.  Well,  I  think  we  sent  directly  to  the  Committee  To 
Re-Elect,  I  believe  it  was  $20,000,  and  we  contributed  $25,000  to  the 
Democrats  for  Nixon,  and  1  think,  in  total,  our  contributions  to  Mr. 
Nixon,  including  the  primary  and  after  the  primary,  about  $60,300. 

Senator  Montoya.  That's  from  your  organization  ? 

Mr.  Hanman.  From  ADEPT,  yes. 

Senator  IMontoya.  Yes. 

Mr.  Weitz.  Let's  go  back  for  a  minute  to  March  and  April  of  1971. 
Not  August  of  1971  or  1972. 

Now,  isn't  it  true  that  on  March  24,  the  day  of  the  dinner,  you  com- 
mitted, on  behalf  of  ADEPT,  a  contribution  of  $50,000  for  tickets  for 
that  dinner,  or  for  other  related  contributions  to  committees.  Repub- 
lican National  Committees  ? 


5882 

Mr.  Hanman.  Well,  I'm  not  sure  whether  it  was  that  night  or  not, 
but  it  was  our  intention  to  contribute  to  those  six  or  seven  or  nine 
committees  $50,000;  yes.  I  think  we  wound  up  giving  $45,000,  as  I 
recall ;  like  the  Republican  National  Finance  Commitfee,  the  Repub- 
lican National  Committee 

Mr.  Weitz.  That  would  be  shown  in  the  record.  They  were  duly 
reported  though,  I  understand. 

When  was  that  decision  made,  to  the  best  of  your  recollection? 

Mr.  Hanman.  Oh,  T  would  say  in  earjy  April. 

Mr.  Weitz.  Wasn't  the  decision — let  me  step  back  for  a  minute. 

In  order  to  make  that  contribution  of  initially  $45,000,  and  uiti- 
mately  $50,000,  didn't  you  borrow  $50,000:  didn't  ADEPT  borrow 
$50,000  from  TAPE,  tlie  political  arm  of  AMPI  ? 

Mr.  Hanman.  Well,  we  borrowed  some  money.  Let  me  see  if  it  was 
$50,000.  You  might  be  right. 

Mr.  Weitz.  All  right. 

Mr.  Hanman.  Yes;  it  was  $50,000, 

Mr.  Weitz.  On  what  date  did  you  borrow  that  money  ? 

Mr.  Hanman.  On  the  19th  of  April. 

Mr.  Weitz.  That  is  the  day  on  which  the  receipt  would  show  there. 

Are  you  aware,  for  example,  that  the  check  from  TAPE  is  dated 
April  5, 1971  ? 

Mr.  Hanman.  It  may  be.  I  will  take  your  word  for  it. 

Mr.  Weitz.  No,  I  am  asking  whether  you  remember. 

And  are  you  aware  of  an  opinion  letter  from  the  firm  of  Reeves  and 
Harrison  to  Bob  Isham,  the  trustee  for  TAPE,  dated,  I  believe, 
March  30, 1971,  indicating  an  opinion  letter  as  to  the  legality  of  TAPE 
making  such  a  loan  to  ADEPT  ? 

Mr.  Hanman.  No  ;  I  am  not  aware  of  that  letter. 

Mr.  Weitz.  Does  that  refresh  your  recollection,  however,  as  to  the 
timing,  let  us  say  before  March  30,  1971,  the  timing  as  to  the  decision 
to  borrow  the  money  from  TAPE  and  make  the  contribution  to  the 
Republican  National  Committee? 

Mr.  Hanman.  Wien  was  the  opinion  ? 

Mr.  Weitz.  The  opinion  letter,  let  us  say  was  March  30.  1971. 

Now  anytime,  let  us  say  between  the  24th,  which  is  the  night  of  the 
dinner,  and  the  30th,  do  you  recall  the  decision  being  made  somewhat 
during  that  time  to  borrow  the  money  and  make  the  contribution? 

Mr.  Hanman.  I  would  guess  it  would  have  been  in  March  when  we 
made  that  decision. 

Mr.  Weitz.  It  would  have  been  closer  to  the  day  of  the  dinner 
than  later? 

Mr.  Hanman.  It  probably  would. 

Mr.  Weitz.  How  many  people  from  Mid-America  did  attend  the 
dinner? 

Mr.  Hanman.  From  ADEPT? 

Mr.  Weitz.  ADEPT  or  Mid-America. 

Mr.  Hanman.  I  believe  there  were  seven  of  us.  I  am  not  sure, 
but  it  was  six,  Jerry  Farmer  and  myself. 

Mr.  Weitz.  And  the  cost  per  ticket  was  how  much?  Do  you 
remember? 

INIr.  Hanman.  I  believe  it  was  $1,000. 


5883 

Mr.  Weitz.  Was  the  entire  $50,000  meant  to  also  go  for  tickets, 
or  as  a  contribution  related  to  the  dinner,  or  was  it  separate  from 
the  dinner? 

Mr.  Hanman.  I  think  both,  probably. 

Mr.  Weitz.  Part  of  the  fundraising  campaign  related  to  the  din- 
ner, would  that  be 

Mr.  Hanman.  Probably. 

Mr.  Weitz.  Now,  in  November  of  1971- 


Senator  Montota.  Let  him  refresh  his  memory  on  that. 

Mr.  Weitz.  I  am  sorry. 

Mr.  Gage.  There  is  a  letter  in  here  from  Marion  Harrison  which 
indicates  the  names  of  these  committees,  which  as  I  recall  from  the 
letter  relates  to  the  kickoff  dinner.  In  other  words,  they  were  com- 
mittees operating  in  connection  with  the  dinner. 

Mr.  Hanman.  I  think  here  I  do  have  a  copy  of  this.  This  is  a 
memo  I  sent  out  to  the  ADEPT  Committee  under  the  date  of  Feb- 
ruary 12.  And  attached  is  a  reprint  from  the  February  4  Congres- 
sional Record  file,  and  also  a  reprint  of  a  letter  from  Lyn  Stolbaum, 
who  is  a  representative  in  Washington,  an  ex-Congressman  that  I 
sent  to  our  people,  to  our  ADEPT  Committee,  and  it  points  out  some 
of  the  administrative  decisions  of  the  Nixon  administration  which 
were  favorable  to  the  dairy  industry.  And  while  my  recollection  is 
not  specific  as  to  time,  this  memo  would  indicate  that  even  prior 
to  the  March  30  meeting,  we,  in  ADEPT,  were  thinking  about  contri- 
butions to  Mr.  Nixon's  reelection  effort. 

Mr.  Weitz.  Do  you  remember  how  much? 

Mr.  Hanman.  No,  I  do  not. 

Mr.  Weitz.  And  you  do  not  remember  discussing  specific  amounts 
at  that  earlier  time  with  representatives  from  the  other  dairy  co-ops  ? 

Mr.  Hanman.  No,  I  do  not. 

Mr.  Weitz.  Let  me  mark  the  letter  from  Harrison  to  you,  dated 
March  30,  1971,  as  exhibit  1. 

[Whereupon,  the  document  referred  to  was  marked  Hanman 
exhibit  No.  1.*] 

Mr.  Weitz.  Now,  you  spoke  of  the  total  amount.  Let  me  ask  you 
about  two  other  contributions.  On  November  2,  1971 

Mr.  Hanman.  November  2,  1971? 

Mr.  Weitz.  There  were  four  contributions  made  of  $2,500  each 
to  the  following  committees  of  ADEPT:  Action  Committee  for  the 
Aged,  Committee  for  Adequate  Health  Care,  Committee  for  Citizens 
Participation,  and  Committee  for  a  Sound  Economy, 

Now,  would  they  come  in  as  established  for  some  Presidential  candi- 
date or  possible  Presidential  candidate  ? 

And  if  so,  whom? 

Mr.  Hanman.  These  were  $2,500  on  November  2? 

Mr.  Weitz.  That  is  right,  for 

Mr.  Hanman.  That  was  for  Senator  Harris. 

Mr.  Weitz.  Was  that  contemplated  as  ijail  of  his  Presidential 
effort? 

Mr.  Hanman.  Ye^. 

Mr.  Weitz.  I  see. 

*  Sec  p.  SiM)!. 


5884 

Now,  on  November  9,  1971  there  was  another  $5,000  contribution, 
and  this  was  to  the  salute  to  the  President  dinner,  and  it  is  noted  in 
your  report  to  the  Clerk  of  the  House  as  "dinner  tickets"  as  opposed 
to  "contribution." 

Do  you  recall  that,  or  do  you  have  anything  that  would  refresh 
your  recollection  as  to 

Mr.  Hanman.  No,  I  think  that  was  another  one  of  those  dinner 
deals  that  they  have  periodically. 

Mr.  Weitz.  Would  that  have  been  related  to  the  earlier  $45,000 
contribution,  series  of  contributions? 

Mr.  Hanmax.  I  do  not  believe  it  was. 

Mr.  Weitz.  But  that  also,  obviously,  was  for  Mr.  Nixon's  reelec- 
tion eflFort? 

Mr.  Hanman.  Yes. 

Mr.  Weitz.  Now.  if  we  add  the  $45,000  together  with  the  $5,000, 
that  would  be  $50,000  for  dinner,  these  two  dinners. 

Mr.  Gage.  I  think  we  ought  to  get  the  documents  about  this 
$45,000  out,  and  get  Mr.  Hanman  to  refresh  his  recollection  on  these. 

Mr.  Weitz.  Fine.  That  would  be  April  1971. 

May  we  take  a  recess  for  a  minute? 

[A  brief  recess  was  taken.] 

Mr.  Hanman.  Looking  here  at  this  ADEPT  file  which  you  have, 
at  those  earlier  $45,000  contributions,  none  of  the  names  on  these 
committees  would  indicate  that  any  of  this  went  to  the  President. 

For  example,  Kick-Off  '72  Republican  Dinner,  Republican  Na- 
tional Committee,  Republican  National  Finance  Committee,  Repub- 
lican National  Finance  Operations  Committee,  Republican  National 
Associates,  Republican  Victory  Committee.  These  were  all  commit- 
tees, either  standing  committees  at  the  time,  or  they  were  set  up — it 
is  my  understanding — were  set  up  in  connection  with  that  dinner. 
The  last  one,  Republican  Congressional  Candidate  Conference. 

That  is  why  I  think  we  have,  when  we  summarized  our  1972  Presi- 
dential campaign  contributions,  that  is  why  our  summary  shows 
$60,300  that  we  know  specifically  went  to  Mr.  Nixon's  reelection 
effort,  the  August  group  to  those  committees. 

Mr.  WErrz.'"Of  $15,000? 

Mr.  Hanman.  Right.  The  $20,000,  I  believe,  was  the  amount  that 
went  to  the  Committee  to  Re -Elect.  It  was  to  various  State  committees. 
But  they  were  committees  to  reelect,  then  the  $25,000  that  was  con- 
tributed to  various  State  committees  of  Democrats  for  Nixon,  So 
our  totals,  if  you  take  1970  through  1972  for  the  Presidential  election — 
our  totals  would  show  a  total  contribution  of  $105,775,  with  $60,300 

foing  to  Mr.  Nixon,  $16,600  going  to  Congressman  Wilbur  Mills, 
8,325  to  Humphrey,  $10,000,  Fred  Harris,  ^,500  to  Scoop  Jackson, 
Senator  Henry  Jackson,  and  $6,050  to  Edmund  Muskie. 

Mr.  Weitz.  Let  me  ask  you  a  question  about  these  committees.  In 
the  accompanying  letter  to  Mr,  Harrison  dated  March  30,  1971,  how 
did  you  come  to  obtain  these  names — "arrange",  I  should  say? 
Obviously,  they  accompanied  the  letter. 

How  did  you  come  to  receive  this  letter  and  agree  to  these  contri- 
butions ? 

Mr.  Hanman.  Again,  I  say  we  had  early  discussions  as  far  as  the 
ADEPT  was  concerned  with  respect  to  contributions  to  the  President. 


5885 

Also,  with  respect  to  contributions  to  various  Members  of  Congress 
and  Senate.  And  some  of  these  being  national  committees,  we  assumed 
some  of  them  probably  would  go  to  the  President,  because  part  of 
these  groups  normally  do  fund  Presidential  races.  Certainly,  the  Re- 
publican National  Committee  ought  to. 

But  again,  we  had  no  specific  knowledge  that  that  is  where  they 
would  go. 

Mr.  Weitz.  Mr.  Harrison  was  also  the  one,  you  indicated, who  sent 
you,  and  to  whom  you  talked  about  the  names  of  six  committees  in 
August  who  received,  who  were  purely  committees  for  the  reelection 
of  the  President,  established  to  receive  dairy  contributions,  and  to 
which  you  actually  did  contribute  $15,000. 

Mr.  Hanman.  Well,  I  am  not  sure  that  they  were  established  specif- 
ically for  dairy  contributions.  They  were  committees  that  were  being 
set  up  to  receive  contributions  for  jMr.  Nixon's  reelection  effort.  But 
I  do  not  know  that  they  were  exclusively  for  dairy  contributions. 

Mr.  Weitz.  Did  Mr.  Harrison  ever  talk  to  j'ou  about  or  did  you 
ever  receive  names  of  committees  from  Mr.  Harrison  other  than  these 
nine  who  were  clearly  for  Republican  candidates  other  than  the 
President  ? 

Mr.  Hanman.  Yes.  I  think  on  occasion  we  have. 

Mr.  Weitz.  I  see. 

Did  you  discuss  with  him  before  receiving  this  list  of  committees 
and  this  letter  the  purpose  of  these  contributions,  who  would  receive 
them,  and  why  you  would  be  making  the  contributions  at  that  time 
and  in  these  amounts  ? 

Mr.  H.\NMAN.  Generally,  I  think  my  recollection  is  that  it  would 
go  to  the  President's  effort  for  reelection,  and  some  of  it  would  go  for 
Congressmen's  and  Senators'  reelection  efforts. 

Mr.  Weitz.  So,  to  sunmiarize  you  cannot  identify  exactly  how  much 
of  this  went  to  the  President's  reelection  effort  and  how  much  went 
to  certain  congressional  candidates,  but  I  take  it  your  testimony  is 
that^ — at  least  your  understanding  is — that  at  least  a  portion  of  this 
would  also  have  been  intended  or  gone  for  the  President's  reelection 
effort? 

Mr.  Hanman.  Yes. 

Mr.  Weitz,  So  in  fact  your  summary  of  $105,775  is  short  by  some 
unidentified  amount  representing  a  portion  of  this  $45,000? 

Mr.  Hanman.  Yes,  I  think  that  would  be  true.  But  the  only  thing 
we  can  specifically  identify  going  to  Presidential  campaigns,  and 
that  is  what  I  thought  your  subpena  was  for,  you  know,  the  1972 
Presidential  election,  was  this  $105,775. 

Mr.  Weitz.  I  understand.  But  at  no  time,  either  before  or  after 
making  these  contributions  of  $45,000  did  you  have  a  discussion  with 
anyone  connected  with  AMPI  about  how  much  money  they  expected 
you  to  make  for  the  President's  reelection  effort  ? 

Mr.  Hanman.  Well,  I  am  sure — I  would  assume — I  think  that  the 
contributions  in  August- — what,  were  $15,000? 

Mr.  Weitz.  From  ADEPT. 

Mr.  Hanman.  Yes,  I  think  I  had  some  discussions  with  Dave  Parr 
on  those.  Now,  I  cannot  recall  what  he  indicated  the  TAPE,  that 
TAPE  might  contribute.  But  there  were  commimications,  bear  in 
mind,  between  the  ADEPT  people  and  the  TAPE  people. 


30-337   O  -  74  -  3 


5886 

Mr.  Weitz.  At  the  time  when  you  talked  with  Mr.  Parr,  had  he  indi- 
cated how  much  they  had  already  given  in  1971  to  the  President's 
reelection  ? 

Mr.  Hanman.  No,  I  do  not  believe  he  did. 

Mr.  Weitz.  Did  he  ever  mention  to  you,  or  did  you  hear  him  dis- 
cuss, any  overall  commitment  to  the  President's  reelection  by  the 
dairy  co-ops? 

Mr.  Hanman.  Not  that  I  can  testify,  no. 

Mr.  Weitz.  Do  you  know  how  many  committees  the  six  that  you 
received  were  a  part  of,  the  names  of  six  committees  that  you  received 
in  August  of  1971  ? 

Mr.  Hanman.  No,  I  do  not.  My  recollection  is  that  there  were  some 
numbers  beside  some  of  them,  were  there  not?  Or  was  there?  Where 
is  that  list? 

Mr.  Gage.  It  is  in  the  ADEPT  file.  I  will  find  it. 

Mr.  Bu^NMAN.  I  may  not  be  right,  but  it  se-emed  to  me  I  remember 
seeing  some  numbers  beside  them.  I  do  not  imagine  it  would  mean  any- 
thing, anyway. 

Senator  Montoya.  Is  this  it? 

Mr,  Hanman.  The  one  I  was  looking  for  is  not  in  there,  Senator. 

Senator  Montoya.  Here  is  the  ADEPT  list.  Is  that  it  ? 

Mr.  Hanman.  That  does  not  show  the  letter  of  transmitt-al  that  has 
those  names  on  it.  There  is  a  list  I  got  from  Marion  Harrison. 

Mr  .Weitz.  Well,  perhaps  we  will  come  back  to  it,  then. 

Mr.  Hanman.  All  right. 

Mr.  Weitz.  You  do  not  recall  independently  how  many  committees 
were  formed,  of  which  these  six  were  a  portion  t 

Mr.  Hanman.  No,  I  do  not. 

Mr.  Weitz.  Were  you  ever  informed  whether  you  would  be  expected 
to  make  another  $2,500  contribution  to  each  of  the  commitees  to  which 
you  contributed  in  August  1971  ? 

Mr.  Hanman.  No. 

Mr.  Weitz.  As  I  understand  it,  ADEPT  contributed  $2,500  each 
to  six  committees? 

Mr.  Hanman.  That  is  right. 

Mr.  Weitz.  Was  it  ever  discussed  that  you  would  contribute  another 
$2,500  to  those  committees  at  some  later  time? 

Mr.  Hanman.  No,  I  do  not  believe  so. 

Mr.  Weitz.  Did  you  ever  ask  why  six  separate  committees  were  sent 
to  you,  each  to  receive  $2,500  ? 

Mr.  Hanman.  I  think  the  committees  that  were  sent  to  me,  there  were 
more  than  six  sent.  Twelve  Avere  sent  to  me,  and  they  numbered — ^there 
were  some  numbers  as  I  recall.  They  numbered  from  52  through  63. 
Name  of  the  committees,  the  chairman,  the  treasurer,  where  it  would  go, 
and  I  made  the  selection  of  the  six,  T  believe. 

Mr.  Weitz.  'V\nio  told  you  to  select  six  out  of  those? 

Mr.  Hanman.  I  do  not  believe  anybody  did. 

Mr.  Weitz.  How  did  you  decide  to  select  only  six,  or  as  many  as 
six? 

Mr.  Hanman.  I  really  do  not  know  why  only  six,  and  I  really  do  not 
know  why  $2,500,  other  than  probably  it  was  because  of  our  financial 
ability  at  the  time,  as  far  as  the  ADEPT  Committee  was  concerned. 


5887 

how  much  money  we  had,  what  our  plans  were  with  respect  to  con- 
tributions to  other  candidates  other  than  the  Presidential  race. 

Bear  in  mind,  as  you  will  notice  when  you  look  through  the  ADEPT 
records,  you  will  see  that  we  have  a  lot  of  other  races  that  we  look  at 
and  did  look  at,  and  there  is  a  sheet  in  there  for  the  year  1972  which 
shows  our  total  available  funds  of  $344,000.  And  of  that  amount 
$158,000  went  to  Democratic  candidates  and  $104,000  went  to  Republi- 
can candidates. 

So  within  the  ADEPT  Committee  we  were  weighing  the  whole 
spectrum  of  government  and  political  races,  congressional  races,  sen- 
atorial races,  Governors'  races.  We  had  some  requirements.  We 
thought  we  had  some  requirements  in  some  individual  States  to  make 
contributions. 

So,  in  other  words,  what  I  am  saying  is  I  think  it  was  a  judgment 
decision  of  available  funds  at  the  time,  and  what  we  thought  projected 
our  costs  or  our  refjuirernents  might  be. 

Mr.  Weitz.  Now,  do  you  think  it  is  coincidental  that  on  the  same 
day  that  you  made  contributions  of  $2,500,  each  to  6  committees  out 
of  12  committees  that  had  been  sent  to  you,  SPACE  made  contribu- 
tions of  $2,500  each  to  12  committees  in  the  amount  of  $30,000  total. 

Were  you  aware  of  that,  or  did  you  discuss  that  with  anybody? 

Mr.  Hanman.  I  was  not  aware  of  that,  no. 

Mr.  Weitz.  Mr.  Parr  did  not  discuss  some  coordinated  effort  ? 

Mr.  Hanman.  SPACE  ?    -^ 

Mr.  Weitz.  By  SPACE.  But  I  am  saying,  Mr.  Parr  of  AMPI  did 
not  discuss  at  that  time,  either  before  or  after  he  sent  you  the  names  of 
these  committees,  a  coordinated  effort  of  contributions  by  the  three 
co-ops  ? 

Mr.  Hanman.  He  was  telling  me  that  SPACE  had  given  $30,000? 

Mr.  Weitz.  Now,  let  me  rephrase  the  question. 

You  said  you  were  not  aware  that  on  the  same  day  you  made  a 
contribution  of  $15,000  to  six  committees  which  you  had  chosen  out  of 
12  conmiittee  names-  sent  to  you,  SPACE  made  a  contribution  of 
$30,000  to  12  committees  ? 

Mr.  Hanman.  No,  T  was  not  aware  of  that;  no.  You  are  talking 
about  SPACE  and  not  TAPE  ? 

Mr.  Weitz.  SPACE.  TAPE  was  making  other  contributions.  I  am 
talking  about  SPACE. 

Mr.  Hanman.  No. 

Mr.  Weitz.  "\Yliat  I  am  asking  you  is,  since  this  letter  of  transmittal 
from  Mr.  Harrison  to  you.  from  Mr,  Chotiner  to  you — the  letter, 
names  of  the  12  committees — my  question  is.  did  Mr.  Parr  of  A^H*I 
ever  discuss  with  you,  either  before  or  after  this  time,  some  coordina- 
tion or  coordinated  effort  to  make  contributions  from  time  to  time  by 
the  3  co-ops  ? 

Mr.  Hanman.  Oh,  yes.  We  talked  about  coordination  of  contribu- 
tions from  time  to  time. 

Mr.  Weitz.  With  some  total  amounts  or  regular  amounts  discussed? 

Mr.  Hanman.  No,  1  think  generally  it  was  along  this  thing  that  we 
would  look  at  a  race,  some  race,  and  we  would  say — the  dairy  farmer — 
without  making  any  specific  reference  to  whether  they  were  Mid-Am, 
AMPI,  or  DI,  dairy  farmers  should  contribute  so  many  dollars  to  this 
particular  candidate. 


5888 

And  then  we  talked  about  how  we  were  going  to  go  about  doing  it. 
There  were  some  discussions,  of  course,  during  this  period,  to  coordi- 
nate, to  make  sure  that  wliat  we  were  reading  in  a  candidate,  they  were 
also  reading  in  a  candidate,  so  that  we  did  not  get  on  opposite  sides  of 
the  fence,  at  least  openly,  not  openly — at  least  consciously,  is  the  way 
I  am  saying  it. 

Now,  in  many  instances  our  group  and  the  TAPE  group,  and  they 
operated  with  a  committee,  as  I  understand  it,  and  the  SPACE  group 
does  now  operate  with  a  committee,  I  think  they  did  then.  We  may 
make  independent  decisions  about  a  particular  race  and  we  may  wind 
up  supporting  opposite  people.  But  generally  there  was  discussion 
about  races. 

Mr.  Weitz.  But  with  regard  to  the  Presidential  campaign  and  the 
funds  going  to  the  President's  reelection,  were  there  specific  discussions 
about  coordinated  contributions  at  specific  times  in  a  regular  way  to 
these  committees  which  were  being  provided  by  Mr.  Harrison  ? 

Mr.  Hanman.  Not  in  a  regular  way,  no. 

Mr.  Gage.  Here  is  a  document  that  is  included  that  you  might  want 
to  inquire  about. 

Mr.  Weitz.  All  right,  thank  you  Mr.  Gage.  Let  me  mark  this  as 
exhibit  2. 

["V^Hiereupon,  the  document  referred  to  was  marked  Hanman 
exhibit  No.  2.*] 

Mr.  Weitz.  I  am  looking  at  a  document  dated  September  13,  1971, 
from  Mr.  Hanman  to  members  of  the  ADEPT  committee,  and  it  is  a 
quarterly  report.  And  it  reads,  the  second  paragraph  reads  as  follows : 
"The  $15,000  contributions  were  a  part  of  the  continuing  commitment 
which  we  had  with  the  administration."  And  then  you  go  on  to  list 
favorable  administrative  decisions- 
Can  you  elaborate  on  what  you  meant  by  commitment  ? 

I  may  be  being  set  up,  but 

Mr.  Hanman.  No,  no,  you  were  not. 

Mr.  Gage.  I  knew  you  would  want  to  inquire  about  it  after  you  looked 
through  the  documents. 

Mr.  Hanman.  He  scorched  me  severely  for  using  the  word  "commit- 
ment," but  my  reason  for  making  that  statement  was  in  communicating 
with  the  ADEPT  committee,  and  there  is  a  memo  again,  February  12, 
which  would  indicate  that  we  had  some  earlier  discussions  about  con- 
tributions to  Mr.  Nixon's  reelection  effort.  And  we  have  talked,  and 
we  did  talk  during  this  period  involved,  about  making  contributions 
based  on  our  availability  of  funds  and  our  ability  to  do  so.  And  I 
think,  as  a  general  rule  our  committee,  coming  from  the  rural  areas, 
generally  felt  that  we  should  support  Mr.  Nixon.  They  are  basically 
rural  area  people.  They  are  farmers,  of  course,  and  they  are  basically 
Republicans.  And  during  this  period  of  time  we  felt  like  we  should 
support  Mr.  Nixon's  reelection  effort. 

I  think  it  is  significant  that  there  were  no  contributions  to  Mc- 
Govern,  either  during  the  primary  or  after  the  primary,  even  though 
he  comes  from  a  farm  State,  because  our  people  could  not  identify  with 
him.  I  think,  generally,  they  could  identify  with  these  other  Demo- 
cratic candidates  that  we  contributed  to.  They  knew  some  of  these 
people  themselves  pei-sonally. 

*  See  p.  5»03. 


5889 

Henry  Jackson,  as  an  example,  has  been  a  gnest  speaker  before  the 
National  Milk  Producers  Federation  before.  He  is  identified  as  a  friend 
of  the  farmers  and  a  friend  of  dairy  farmers.  And  I  think  all  of  these 
generally  were. 

So  I  think  the  use  of  the  word  "commitment"  here  was  our  internal 
decision  to  make  contributions  to  Mr,  Nixon's  reelection  effort,  based 
on  our  ability  at  the  time  we  had  to  make  that  decision  to  fund  it. 

Mr.  Weitz.  Now,  you  say  "part  of  the  continuing  commitment." 
At  that  time  you  had  contributed  at  least  $15,000  clearly  eai-marked 
for  the  President,  perhaps  some  larger  sum,  depending  on  that  portion 
of  the  April  contribntions  that  may  have  gone  to  the  President. 

At  that  point  or  at  some  later  point,  did  you  discuss  the  amounts 
that  in  fact  would  be  contributed  to  the  President  in  addition  to  the 
earlier  contributions? 

This  is  September? 

Mr.  Hanman.  September  1971  ? 

Mr.  Weitz.  Yes. 

Mr.  Hanmax.  I  think  we  had  some  later  discussions  in  1972  about 
the  contributions.  We  did,  as  you  know,  contribute  $25,000  to  the  Demo- 
crats for  Nixon.  And  I  think  our  records  would  show  that  at  the  end 
of  1972  we  pretty  well  cleaned  out  our  fund,  our  available  funds.  I 
think  we  wound  up  the  year  with  just  a  small  balance,  maybe  $4,000. 
And  that  last,  sort  of  clean-out  effort  of  the  available  funds  did  go  to 
the  Committee  To  Re-Elect,  and  I  think  that  was  $20,000.  And  that 
was  delivered  pretty  late  in  the  campaign. 

Mr.  Weitz.  November  of  1972  ? 

Mr.  Hanman.  Yes,  right. 

Mr.  Weitz.  Did  there  come  a  time — ht  us  move  to  1972. 

Did  there  come  a  time  in  1972  or  late  1971  when  you  discussed  with 
either  representatives  in  the  administration  or  other  dairy  represent- 
atives, tlie  advisability  of  stopping  an}^  fui'ther  contributions  to  nu- 
merous committees,  as  you  had  done  in  1971  ? 

Mr.  Hanman.  I  believe — and  I  could  be  wrong — that  in  April  of 
1972  the  law  was  changed,  whereby  there  was  not  a  $5,000  limit  to  any 
one  committee.  And  so,  I  do  not  think  we  had  that  problem  after  that 
law  was  changed. 

Mr.  Weitz.  But  before  the  law  was  changed,  did  you  ever  discuss 
whether  or  not  you  should  make  additional  contributions,  small  con- 
tributions to  numerous  committees  before  the  April  7  law  ? 

Mr.  Hanman.  To  Mr.  Nixon's  reelection  effort  ? 

Mr.  Weitz.  Yes,  to  Mr.  Nixon's  reelection  effort. 

Mr.  Hanman.  Not  that  I  can  recall. 

Mr.  Weitz,  Did  you  ever  meet  with  Mr.  Kalmbach  during  1972? 

Mr.  Hanman.  No  ;  I  do  not  even  know  ]\:Ir.  Kalmbach. 

Mr.  Weitz.  Did  vou  ever  meet  with.  Loe  Nunn  on  the  Finance  Com- 
mittee To  Re-Elect? 

Mr,  Hanman.  No. 

]Mr.  Weitz.  Did  you,  m  1972,  meet  v.ith  Jake  Jacobsen  of  the  Demo- 
crats for  Nixon  organization  ? 

Mr.  Hanman.  Yes. 

Mr.  Weitz.  Could  you  tell  us  about  those  meetings  or  meeting? 

]\Ir,  Hanman.  YvMl,  we  had  one  meeting.  I  do  not  know  the  date — 
in  Washington.  I  believe  at  the  Madison  Hotel  with  Mr.  Jacobsen  and 


5890 

John  Connally.  That  was  after  he  had  left  the  administration.  He 
was  out  organizing  this  Democrats  for  Nixon.  And  I  believe  myself 
and  our  manager  Gene  Baldi — we  had  changed  managers  in  the  in- 
terim here.  Wes  Johnson  had  retired  and  Gene  Baldi  was  our  new 
manager — and  I  believe  Joe  "West water  and  Ben  Morgan  from  DT  met 
with 

Mr.  WF.rrz.  All  at  the  same  meeting? 

Mr.  Hanman.  Yes,  I  believe  that  the  six  of  us  were  there. 

And  we  talked  in  generalities,  I  think,  to  Mr.  Connally  about  the 
dairy  situation. 

Senator  Montoya.  What  date  was  that  ? 

Mr.  Haxmax.  T  have  a  letter,  a  followup  letter  ^  after  the  meeting,  to 
the  Secretary,  I  think. 

Mr.  Gage.  It  is  in  the  Harrison-Jacobsen  correspondence. 

Mr.  Hanman.  My  guess  would  be  that  it  would  be  mid-1972. 

Well,  the  letter  is  dated  August  the  17th,  so  I  would  guess  it  would 
be  in  early  August  when  we  met  with  Secretary  Connally.  Because 
aftei-  Ave  met  with  him.  I  prepared  sort  of  a  sinnmation  of  the  state 
of  the  TTnion.  as  far  as  the  dairy  industry  was  concerned,  and  sent  it 
to  him,  and  this  is  a  cover  letter  that  went  along  with  that.  It  went  to 
Jake,  because  Mr.  Jacobsen,  at  the  time,  was  coordinating  this  Demo- 
crats for  Nixon  effort  with 

Mr.  Weitz.  Let  me  mark  this  as  exhibit  3. 

[Whereupon,  the  document  referred  to  was  marked  Hanman  exhibit 
No.  H.^l 

Mr.  Weitz.  Mr.  Jacobsen  arranged  the  meeting? 

Mr.  Hanman.  Yes. 

Senator  Montoya.  What  did  you  discuss  with  the  Secretary  at  tliat 
meeting  ? 

Mr.  Hanman.  We  discussed  GATT  for  one  thing.  We  discussed  the 
dairy  situation,  production,  sales,  costs.  We  discussed  his  Democrats 
for  Nixon.  We  indicated  then  that  we  would  make  a  contribution  to 
the  Democrats  for  Nixon  effort. 

Senator  Montoya.  Did  you  tell  him  how  much  ? 

Mr.  Hanman.  Yes,  I  think  we  did ;  $25,000. 

Mr.  Weitz.  Did  Dairymen,  Inc.,  at  that  time  also  make  a  commit- 
ment, or  say  how  much  they  intended  to  contribute? 

Mr.  Hanman.  I  believe  they  made  a  commitment  indicating  they 
would  contribute  $25,000. 

Mr.  Weitz.  At  the  same  time  was  there  any  mention  as  to  whether 
additional  funds  contributed  either  by  ADEPT  or  SPACE  to  the 
finance  committee? 

Mr.  Hanman.  To  reelect? 

Mr.  Weitz.  Yes. 

Mr.  Hanman.  I  do  not  believe  so. 

Mr.  Weitz.  So  you  only  discussed  contributions  for  Democrats  for 
Nixon  ? 

Mr.  Hanman.  Yes. 

Senator  Montoya.  There  were  six  people  there  ? 

Mr.  Hanman.  Yes. 

1  Spp  Connally  oxhihlt  No.  5,  p.  6090. 

2  See  p.  590f). 


5891 

Senator  Montoya.  How  much  was  the  total  commitment  by  all  of 
them? 

Mr.  Hanman.  Well,  it  would  be  $50,000. 

Senator  MoNTOYA.  Each? 

Mr.  Hanman.  No,  I  was  there  represontinfr  ^he  ADEPT  commit- 
tee. Mr.  Baldi  was  there  representing  the  Mid-America  Dairymen. 
Then,  on  the  Dairymen,  Inc.,  side'Joe  Weswator  w^as  there  discussing 
their  political  action  arm. 

So  there  were  really  only  two  groups  there.  Each  one  committed 
for  $25,000. 

Mr.  Weitz.  Was  that  the  first  time  you  met  Secretary  Connally? 

Mr.  Hanman,  Yes,  it  was. 

Mr.  Weitz.  Did  you  discuss  any  substantiye  goyernmental  policies 
with  the  Secretary,  in  the  sense  of  the  price  support  level  for  1972, 
1973,  or  the  import  quota  question  ? 

Mr.  Hanman.  My  recollection  is  that  we  did  discuss  the  price  sup- 
port issue,  and  we  honed  in  specifically  on  the  P'lanigan  report,  or  an 
administrative  attitude  relative  to  what  position  the  administration 
will  take  in  our  negotiation  with  the  Common  Market  countries. 

They  were  about  to  renegotiate  the  General  Agreement  on  Tariff 
and  Trade,  the  GATT  agreement.  So  Secretary  Connally  had  been  in 
the  international  circle,  so  we  talked  to  him  abovit  that. 

Mr.  Weitz.  Did  any  of  the  representatives  of  Dairymen,  Inc.,  or 
SPACE,  in  any  way  mention  or  discuss  the  civil  antitrust  suit  at  that 
time  pending  against  them  ? 

Mr.  Hanman.  Not  that  I  recall.  We  may  have  talked  to  Mr.  Con- 
nally about  an  attitude  of  the  adm.inistration  relative  to  co-ops  in 
general. 

Mr.  Weitz.  An  antitnist  attitude  ? 

Mr.  Hanman.  Yes, 

Mr.  Weitz.  By  the  Justice  Department  ? 

Mr.  Hanman.  Yes.  We  felt  then,  and  T  think  we  still  feel  that  there 
are  some  people  in  the  Justice  Department  that  are  anticooperative. 
And  I  would  guess  we  talked  to  him  about  it,  because  that  is  one  of  the 
key  issues  that  still  bothers  us. 

Mr.  Weitz.  Did  he  indicate  in  any  way  he  would  talk  to  anyone  else 
about  these  problems,  such  as  Mr.  Mitchell  ? 

Mr.  Hanman.  No,  I  do  not  believe  he  did. 

Mr.  Weitz.  Or  anyone  in  the,  administration  at  that  time? 

Mr.  Hanman.  I  do  not  believe  he  committed  to  do  anything  at  the 
meeting.  I  do  not  believe  he  did. 

Mr.  Weitz.  Did  you  understand  at  a  later  time  that  he,  in  fact, 
did  contact  anyone  on  your  behalf,  such  as  Mr.  Flanigan  or  anyone 
else? 

Mr.  Hanman,  No,  not  that  I  recall. 

Senator  Montoya.  Why  were  you  talking  to  him  ? 

Mr.  Hanman.  Where? 

Senator  Montoya,  Why  were  you  talking  to  him  ? 

Mr.  Hanman.  We  were  talking  to  him  because  he  was  ex-Secretary 
of  the  Treasury.  He  did  have  an  understanding  or  a  working  knowl- 
edge of  the  administration.  We  were  trying  to  get  a  feeling  from  him 
as  to  whether  or  not  some  of  the  impressions  we  were  getting  were, 
in  fact,  what  the  administration's  attitude  was,  that  being,  are  they  g- 


5892 

ing  to  trade  off  the  dairy  farmers  in  order  to  get  grain  exports  and 
general  agreements  on  tariff  trade? 

Are  there  really  within  the  Justice  Department  people  that  are 
mounting  a  movement  to  destroy  dairy  co-ops  and  co-ops  in  general  ? 

I  think  we  were  just  generally  trying  to  get  impressions  from  him. 

Senator  Montoya.  Why  were  you  trying  to  get  impressions  from 
him? 

What  expertise  would  he  have  in  that  area  if  he  was  Secretary  of 
the  Treasury  ? 

Mr.  Hanman.  Probably  no  expertise  other  than  what  he  had  picked 
up  from  other  people  in  the  administration. 

Senator  Montoya.  Why  would  you  tell  him  at  that  meeting  that  you 
would  contribute  $50,000? 

Mr.  Hanman.  Well,  again,  I  think  our  group  wanted  to  contribute 
to  Mr.  Nixon's  reelection  effort. 

Senator  Montoya.  Why  did  you  select  Secretary  Connally  as  the 
official  recipient  of  the  good  news  ? 

Mr.  Hanman.  Well,  I  don't  guess  really  there  was  any  reason  ex- 
cept that  he — we  did  have  the  attitude  at  that  time  that  maybe  you're 
on  both  side^  of  the  fence — that  you  were  supporting  a  movement 
that  was  both  Democratic  and  Republican — and  we  do  try  to  main- 
tain a  posture  within  our  ADEPT  committee  of  being  bipartisan  on 
both  sides. 

Senator  Montoya.  No.  But  what  I'm  getting  at  is  why  was  this 
particular  meeting  chosen  to  make  a  commitment  to  the  contributions, 
and  why  was  Secretary  Connally  there  if  it  was  not  for  some  purpose 
that  you  had  in  mind  before  the  meeting  was  set? 

Mr.  Hanman.  I  don't  know  that  we  had  any  specific — I  don't  know 
that  we  had  our  minds  made  up  really  when  we  went  in  to  see  him 
that  we  were  going  to  make  a  commitment  to  contribute. 

Senator  Montoya.  You  mean  you  just  went  into  the  room,  and  after 
you  discussed  tariffs  and  antitrusts,  that  you  just  up  and  said  on  be- 
half of  your  organization,  they  commit  $25,000,  and  Mr.  Parr  got 
up— 

Mr.  Hanman.  It  wasn't  Parr. 

Senator  Montoya.  Whoever  it  was. 

Mr.  Hanman.  Mr.  Westwater. 

Senator  Montoya.  And  Mr.  Westwater  says  "I  commit  $25,000.". 
Now,  what  triggered  that  commitment  ? 

What  triggered  your  coordination  with  him  ? 

Mr.  Hanman.  With  him? 

Senator  Montoya.  On  the  $25,000  ? 

Mr.  Hanman.  I  don't  really  know,  to  tell  you  the  truth. 

Senator  Montoya,  There  has  to  be  some  basis  for  it ;  you  don't  just 
go  into  a  room  and  commit  $25,000. 

Now.  the  committee  members  are  going  to  ask  you  that  question,  and 
that's  what  I'm  preparing  you  for. 

Mr.  Elder.  Did  anybody  suggest  $25,000  per  committee  ? 

INIr.  Hanman.  I'm  sure  there  were  discussions  between  ADEPT 
and  SPACE  of  contribution. 

Senator  Montoya.  But  you  were  representing  ADEPT,  you  should 
have  known. 


5893 

Mr.  Hanman.  I  should  have  known  ? 

Senator  Montoya.  That  there  were  specific  conversations  to  co- 
ordinate this  effort. 

Mr.  Hanman.  Oh,  yes.  I  did  know  we  were  talking  about  contribu- 
tions to  Mr.  Connally's  effort  on  behalf  of  Mr.  Nixon.  All  I  am  say- 
ing is — and  we  were  going  to  contribute  some  money,  but  I  don't 
believe  that  at  the  time  we  went  in  that  meeting — that  we  were  going 
in  there  with  an  understanding  that  we  were  going  to  make  a  specific 
commitment. 

Senator  Montoya.  But  you  did. 

Mr.  Hanman.  But  we  did. 

Now,  why  ?  I  think  ]Mr.  Connally  asked  us  if  we  were  going  to  make 
a  commitment,  a  contribution.  He  indicated  that  he  was  going  to  have 
a  party  in  Texas  somewhere  where  the  President  would  be  there.  He 
would  like  for  some  of  us  people  to  be  there. 

Senator  JSIontoya.  With  the  money  ? 

Mr.  HiVNMAN.  No,  he  was  inviting  only  those  people,  I  think,  who 
were  going  to  make  some  contributions.  And  as  I  recall,  as  the  way  the 
meeting  developed,  that's  how  we  got  to  the  $25,000.  It  was  an  oppor- 
tunity to  go  to  this  dumer  and  meet  the  President  and  meet  some  of  his 
supporters.  And  I  believe  that's  about  the  way  it  developed. 

Senator  IMontoya.  Did  you  take  the  checks  to  that  meeting  ? 

Mr.  Hanman.  No,  I  don't  believe  we  did.  I  believe  they  were  deliv- 
ered later.  They  were  delivered.  I  don't  know  what  the  dates  of  the 
checks  were,  but  I  believe  they  were  delivered  later  to  the  Democrats 
for  Nixon  here  in  Washington,  where  they  had  their  headquarters  set 
up,  and  they  were  made  out  to  some  State  organizations,  and  I  don't 
believe  at  the  time  that  that  meeting  was  set  up  that  they  had  their 
State  organizations  set  up,  the  Democrats  for  Nixon. 

Mr.  Weitz.  I  am  looking  at  a  GAO  report  for  the  period  covering 
August  and  September  1972.  It  shows  that  on  September  19,  you  made 
contributions  totalling  $25,000  to  five  different  committees  in  five  dif- 
ferent States,  but  essentially  part  of  the  Democrats  for  Nixon. 

Mr.  Hanman.  Right.  In  other  words,  we  made  them  after  the  meet- 
ing, which  probably  was  in  early  August. 

Mr.  Weitz.  And  when  was  this  party  for  the  President?  Do  you 
recall  ? 

Mr.  Hanman.  I  really  don't  know.  I  really  don't  know. 

Mr.  Weitz.  Was  it  your  recollection  that  these  contributions  would 
have  been  delivered  after  the  party  ? 

Mr.  Hanman.  What's  the  date  ? 

Mr.  Weitz.  September  1972,  is  what's  reported. 

Mr.  Hanman.  I  would  guess — and  I'm  not  sure  of  this — that  it  was 
probably  before. 

Mr.  Weitz.  The  party  was  between  the  meeting  with  Mr.  Con- 
nally  

Mr.  Hanman.  It  was  before,  after  the  contributions  were  made.  It 
was  in  late  September,  I  believe.   - 

Senator  Montoya,  The  party  ? 

Mr.  Hanman.  Yes. 

Mr.  Weitz.  So  in  other  words,  the  contributions  were  made  before 
you  attended  the  party  for  the  President  ? 

Mr,  Hanman.  Yes. 


5894  ^ 

Mr.  Weitz.  How  did  you  come  to  make  contributions  for  the  Com- 
mittee To  Ke-Elect — the  Finance  Committee  To  Re-Elect  ?  Did  that 
come  about  as  a  result  of  some  specific  meeting  or  conversation? 

Mr.  Hanman.  No,  I  don't  believe  it  did.  I  believe  there  was  a  feeling 
of  our  committee  that  after  the  November  election  in  1972,  we  prob- 
ably wouldn't  have  a  big  demand  for  funds  in  1973  because  there 
wouldn't  be  any  race.  There  wouldn't  be  any  demand  until  1974. 

So  there  wasn't  any  need  to  cslttj  over  any  funds  from  one  year 
to  another.  And  I  believe  the  way  that  one  came  about  was  we  got 
down  to  pretty  well  the  end  of  the  election,  the  end  of  our  year,  and 
we  had  some  money  on  hand,  and  so  we  decided  to  make  a  contribution 
to  the  Committee  To  Re-Eiect,  and  I  believe  our  records  will  show 
that  we  just  about  cleaned  the  fund  out. 

Mr.  WErrz.  Are  you  aware  that  around  the  same  time,  just  before 
the  election,  that  SPACE  also  contributed  $25,000  ? 

Mr.  Hanman.  I  was  aware  that  SPACE  was  going  to  make  some 
contributions  to  the  Committee  To  Re-Elect  the — we  ha-d  some  con- 
tact with  a  fellow  involved  in  Mr.  Nixon's  reelection  efforts  by  the  name 
of  Clayton  Yeutter.  He  was  directing  Mr.  Nixon's,  I  believe,  Midwest 
agricultural  effort.  He's  from  Nebraska  originally  where  we  have 
quite  a  few  members^  And  we  got  to  know  him  during  this  time. 
And  it  was  to  him  I  delivered  these  checks. 

Mr.  Weftz.  Did  he  tell  you  about  the  contributions  that  were  being 
contemplated  by  SPACE,  or  did  you  get  that  directly  from  the 
SPACE  people? 

Mr.  Hanman.  I  dont  believe  I  got  it  from  him.  I  don't  really  know 
how  much  they  gave,  really. 

Mr.  Weitz.  Did  anyone  ever  come  to  you  in  late  1972  and  talk  to 
you  about  the  additional  moneys  they  expected  you  to  contribute  as 
a  result  of  the  milk  price  support  decision  ? 

Mr.  Hanman.  No. 

Mr.  Weitz.  Did  anyone  of  the  other  dairy  co-ops  ever  talk  to  you 
about  fulfilling  a  commitment  that  had  been  made  as  a  result  of  the 
milk  price  support  decision  ? 

Mr.  Hanman.  No. 

Mr.  Weitz.  And  the  contributions  that  were  in  fact  made  by 
ADEPT  were  made  as  a  part  of  the  general  commitment  to  the  Presi- 
dent or  in  support  of  the  President,  and  not  in  exchange  for  or  as 
part  of  the  commitment  specifically  for  the  milk  price  support  deci- 
sion in  1971 ? 

Mr.  Hanman.  That's  right. 

Mr.  Weftz;  Did  you  ever  discuss  the  antitrust  policy  of  the  admin- 
istration with  any  other  administration  or  ex-administration  officials 
during  1971  or  1972? 

Mr.  Hanman.  Not  that  T  recall. 

Mr.  Elder.  There's  one  thing  that  I'm  a  little  confused  on;  in  a 
meeting  at  the — with  Secretary  Connally 

Mr,  Hanman.  With  Secretary  Connally. 

Mr.  EiJ)ER.  With  Secretary  Connally.  Who  suggested  the  total 
figure  of  $50,000  divided  ?  Did  it  come  from  you  people  or  Secretary 
Connally  ? 

Mr.  Hanman.  I  don't  know  that  there  was  a  total  of  $50,000  divided. 
I  think  we  had  some  discussions — we,  being  ourselves  and  Joe  West- 
water,  probably  Ben  Morgan — as  to  how  much  we  might  contribute. 


5895 

And  as  I  recall  the  thought  was  that  the  SPACE  funds  generate 
about  the  same  amount  of  money  that  the  ADEPT  funds  do,  even 
though  we  have,  we  may  have  more  contributors  than  they  do.  I  think 
ours  are  generally  smaller.  If  you  look  at  a  summary  in  here,  you  will 
notice  that — here  is  a  breakdown  of  annual  contributions  by  the  dairy 
farmers  who  contribute  to  ADEPT. 

And  you  can  see  that  our  average  annual  contribution  is — well, 
we've  got  a  lid.  We  say  we  don't  want  to  have  any  more  than  $99.96. 
The  reason  that  lid  was  put  on  there  originally  is  that  under  the  old 
law  you  had  to  report  their  name  individually  if  they  gave  $190  or 
more,  and  we  didn't  want  to  print  every  guy's  name  on  a  report  to 
the  Clerk  of  the  House. 

But  you  can  see  that  our  sizes,  our  amount  of  contributions  are  rela- 
tively small.  But  to  answer  your  question,  I  think  our  funds  generated 
were  about  the  same,  and  I  think  that  generally  what  we  thought  what- 
ever the  one  would  do,  the  other  would  do  about  the  same. 

Mr.  Elder.  Generally,  the  two  committees  arrived  at  the  conclusion 
that  they  would  donate  a  total  of  $50,000,  or  did  Mr.  Connally  suggest 
the  total  figure  of  $50,000  ? 

Mr.  Hanman.  No,  I  think,  generally,  the  two  committees,  maybe 
more  specifically  myself  and  Mr.  Wes water,  probably  recommended  an 
equal  amount. 

Mr.  Elder.  All  right. 

The  only  other  question  I  would  like  to  ask,  and  I  think  you've  an- 
swered it,  out  just  to  be  sure.  You  did  not  donate,  I  take  it,  you  did  not 
donate  any  funds  to  the  McGovern  Presidential  committee  ? 

Mr.  Hanman.  No,  we  did  not. 

Mr.  Elder.  OK. 

Mr.  Wettz.  One  further  question. 

Did  Mr.  Jacobsen,  either  before  or  after  or  during  that  meeting  with 
Mr.  Connally,  suggest  a  particular  figure  or  amount? 

Mr.  Hanman.  No,  I  believe  that  Joe  Weswater  and  I  had  agreed  be- 
fore that  we  were  going  to  recommend  $25,000  apiece.  We  did  not  in 
tend,  when  we  went  in  there  to  see  Mr.  Connally,  that  we  would  com- 
mit at  that  time,  because  bear  in  mind  as  I  recall  their  organization 
structure  really  hadn't  been  firmed  up.  They  weren't  really  ready  to  re- 
ceive any  funds,  but  we  did  make  a  decision  while  we  were  there,  in 
view  of  this  party  that  was  coming  up,  that  we  would  tell  them  right 
then  what  we  were  going  to  do. 

But  there  was  no  arm-twisting  from  either  Jacobsen  or  John  Con- 
nally as  to  amount. 

Mr,  Weitz.  Let  mc  ask  you  one  further  question. 

Before  the  meeting,  did  you  tell  Mr.  Jacobsen  of  j^our  intent  at  some 
point  in  the  future  to  recommend  to  your  committee  a  contribution  of 
$25,000  or  some  amount  ? 

Mr.  Hanman.  I  may  have,  but  I  don't  recall  that  I  did. 

Mr.  Wkitz.  Senator,  do  you  have  any  questions? 

Senator  Montoya.  Yes,  I  have  just  one  question. 

The  point  I  want  to  make  is  this :  Now,  you're  going  to  be  asked  this 
question  in  open  hearing;  now,  John  Connally  doesn't  go  to  the  Madi- 
son Plot  el  just  to  listen  to  dairymen  talk  about  their  problems  during 
the  coiirsi  of  a  political  campaign. 


5896 

Now,  he  must  have  had  some  indication  from  you  people  or  from 
other  people,  that  you  were  coming  in  there  to  commit  yourselves  to 
make  a  contribution  to  the  President.  Now,  give  us  some  light  on  that. 

Now,  they're  going  to  ask  j^ou  this. 

Mr.  Hanman.  Well,  I  am  sure — well,  I'm  not  sure  either. 

Senator  Montoya.  I  just  don't  want  you  to  appear  silly  in  open  hear- 
ing, that  you  just  went  in  there  because  somebody  was  going  to  be  in 
room  so-and-so. 

Mr.  Hanman.  Oh,  no.  This  meeting  was  set  up  by  Jake  Jacobsen, 
and  he  was  coordinating  Mr.  Connally's  efforts,  and  I'm  sure  we  indi- 
cated that  we  would  make  a  substantial  contribution. 

Senator  Montoya.  Before  you  went  in  there  ? 

Mr.  Hanman.  Yes,  but  not  necessarily  at  that  meeting,  Senator.  We 
had  indicated  that  we  would  make  a  substantial  contribution  to  the 
Democrats  for  Nixon.  But  we  didn't.  We  did  not  intend,  when  we  went 
in  to  see  Mr.  Connally,  that  we  would  tell  him  at  the  time  what  we  were 
going  to  do. 

And  I'm  not  sure  that  we  had  even  communicated  to  Mr.  Jacobsen 
what  our  intentions  were  to  contribute. 

Senator  Montoya.  Well,  when  did  you  first  know  that  you  would 
meet  Connally  at  that  room  ? 

Mr.  Hanman.  You  mean,  when  did  we  fi.rst 

Senator  Montoya.  Before  you  left  home  ? 

Mr.  Hanman.  Yes,  sure  we  did.  I  didn't  know  about  the  specific 
room,  but  I'm  sure 

Senator  Montoya.  Was  that  the  purpose  of  your  trip,  to  meet 
Connally  ? 

Mr.  Hanman.  Not  the  only  purpose,  I  wouldn't  think.  This  was  in 
1972.  Usually  when  I  come  to  Washington,  I  work  on  some  other  things 
while  I  am  up  here,  but  that  might  have  been  the  major  reason. 

Senator  Montoya.  Who  called  you  to  meet  Connally  ? 

Mr.  Hanman.  Probably,  it  would  have  been  Jake  Jacobsen. 

Senator  Montoya,  And  did  you  indicate  to  him  that  you  would  make 
a  contribution  ? 

Mr.  Hanman.  I'm  sure  we  did. 

Senator  Montoya.  And  the  amount  ? 

Mr.  Hanman.  I'm  not  sure  we  committed  a  specific  amount. 

Senator  Montoya.  You're  not  sure  ? 

Mr.  Hanman,  No. 

Mr.  Weitz.  One  further  question.  We  keep  saying  this,  but  one  fur- 
ther question. 

At  the  party  for  the  President  in  September,  late  September  of  1972, 
did  you  and  some  other  members  of  ADEPT  attend  ? 

Mr.  Hanman.  No,  I  think  our  president  and  his  wife  and  our  gen- 
eral manager.  Mr.  Baldi  and  his  Avife  went. 

Mr.  Wettz.  Representatives  of  Mid- America  did  attend  ? 

Mr.  Hanman.  Yes. 

Mr.  Wettz.  Did  representatives  of  Dairymen,  Inc? 

Mr.  Hanman.  Yes,  I  believe  they  did. 

Mr.  Weitz.  Do  you  know  whether  representatives  of  AMPI  also 
attended  ? 

Mr.  H.xnman.  No,  I  do  not,  whether  thev  did  or  not. 


5897 

Mr.  Weitz.  Could  you  tell  us  again  who  the  representatives  for  Mid 
America  were  ? 

Mr.  Hanman.  Yes,  our  president,  Bill  Powell,  and  his  wife,  Joy,  and 
(rene  Baldi  and  his  wife,  Eleanor. 

Mr  Weitz.  Thank  you. 

Mr.  Gage.  Have  you  got  any  more  questions?  I  have  just  one  or  two 
clarifying  questions. 

Mr.*  Weitz  abked  you  about  this  memo  that  speaks  of  continuing 
commitmont  with  the  administration.  Just  so  there  is  no  question 
about  your  testimony,  this  wasn't  a  commitment  in  terms  of  an  ar- 
rangement with  the  administration  to  contribute  a  particular  amount? 

Mr.  IIanman.  No. 

Mr.  Gage.  Iri  other  words,  it  was  just  an  internal  commitment,  that 
you  were  going  to  make  contributions  dependent  on  how  your  monej'^ 
sources 

Mr.  Hanmax.  That's  right. 

Mr.  Gage.  And  how  the  other  contributions  worked  out. 

Now,  there  is  a  statement  in  here  from — when  did  Jake  Jacobsen 
start  representing  Mid-Am  ? 

Mr.  Hanmax.  I  would  say  in  late  1972.  I  don't  know  what  the  exact 
date  was. 

Mr.  Gage.  Was  there  some  legal  fee  reimbursed  to  AMPI  before  that 
for  amoimts  they  paid  Jake  Jacobsen  ? 

Mr.  Haxmax.  Yes. 

Mr.  Gage.  Do  \  ou  recall  the  amount  of  that  ? 

Mr.  Haxmax.'I  believe  it  was  $5,000. 

Mr.  Gage.  Now,  what  legal  services  to  Mid-Am  did  that  involve? 

Mr.  Hanmax.  Well,  this  was  back  when  our  members  were  ta,lking 
about  setting  up  some  type  of  political  trust  organization,  and  they 
were  hearing  rumors  about 

Mr.  Gage.  The  question  was,  Mid-Am,  what  services  to  Mid-Am  were 
involved  ? 

Mr.  Hanmax^.  He  was  advising  our  people,  our  board,  as  to  what  by 
law  they  couldn't  do.  They  couldn't  make  political  contributions  using 
corporate  funds. 

Now,  that  is  why  that  bill  was  tendered  to  Mid-Am,  because  he  was 
giving  us  that  legal  advice. 

Mr.  Gage.  Was  that  done  at  a  series  of  division  board  meetings? 

Mr.  Hanmax.  Yes. 

Mr.  Gage.  ^^Tiich  included  Mid-Am  division  directors. 

Now,  there  is  a  statement  hore  dated  October  2,  1973,  which  is  in- 
cluded in  the  documents.  Would  you  look  at  that  and  comment  on 
whether  it  correctly  states  what  the  legal  services  were  ? 

Mr.  Haxman.  No,  Mr.  Jacobsen,  as  far  as  the  ADEPT  group  was 
concerned,  was  giving  us  advice  on  how  we  might  restructiirc  tlie 
ADEPT  organization  rather  than  giving  some  legal  opinion  on  the 
price  freeze.  I  think  that  more  properly  reflects  some  legal  services 
rendered  to  Mid-Am  than 

Mr.  Gage.  Did  he  also  render  a  statement  to  Mid-Am  at  the  same 
time? 

Mr.  Hax'max\  Yes. 

Mr.  Gage.  In  a  like  amount  ? 

Mr.  Haxmax.  Yes. 


5898 

Mr.  Gage.  All  ri^ht. 

Now,  we  noted  m  going  through  these  documents,  we  are  missing 
the  October  and  possibly  September  statements  to  Mid-Am  of  Jake 
Jacobsen.  But  we  will  furnish  them.  One  way  or  another  we  didn't  get 
them  in  the  documents. 

Mr.  Hanman.  ok. 

Senator  Montoya.  Why  would  he  send  a  statement  to  ADEPT, 
which  was  a  political  arm,  for  services  with  respect  to  the  price  freeze 
and  general  dairy  problems  ? 

Mr.  Hanman.  Well,  I  don't  think  he  should  have  because  I  thinli 
those  types  of  advice  were  given  to  Mid-Am  and  not  to  ADEPT.  Bear 
in  mind  that  during  this  period,  he  was  also  rendering  some  opinions 
and  legal  advice  to  Mid-Am. 

Senator  Montoya.  Did  you  pay  him  with  other  checks? 

Mr.  Hanman.  From  Mid-Am  ? 

Senator  Montoya.  Yes. 

Mr.  Hanman.  Yes.  And  we  also  paid  him  this  amount  here  from 
the  ADEPT  account. 

Senator  Montoya.  And  did  you  pay  from  Mid-Am  or  ADEPT  any 
moneys  to  Harry  Dent  ? 

Mr.  Hanman.  ISTo. 

Senator  Montoya.  Chotiner  ? 

Mr.  Hanman.  No. 

Now,  I  say  no,  but  his  jRrm,  Marion  Harrison,  we  do  have  on  a  re- 
tainer for  Mid-Am. 

Senator  Montoya.  And  how  long  have  they  represented  you? 

Mr.  Hanman.  I  believe  since  December  1972  or  January  1973. 

Senator  Montoya.  Did  you  pay  them  any  moneys  prior  to  that 
time? 

Mr.  Hanman.  No. 

Senator  Montoya.  At  all  ? 

Mr.  Hanman.  No. 

Senator  Montoya.  And  is  Mr.  Hillings  part  of  that  firm?  Pat 
Hillings? 

Mr.  Hanman.  I  understand  he  was  earlier,  but  he  isn't  now.  He 
wasn't  involved  in  that  firm  at  any  time  after  I  got  there. 

Mr.  Weitz.  In  the  same  regard,  are  you  aware  of  any  legal  fees 
that  were  paid  to  any  of  the  attorneys  we  have  just  mentioned  through 
the  common  organization  of  which  Mid- America  is  a  member,  such  as 
the  successor  of  Associated  Dairymen  or  some  other  like  associations  ? 

Mr.  Hanman.  Not  to  my  knowledge. 

Mr.  Gage.  Are  you  referring  to  CACF  ? 

Mr.  Weitz.  I  think  I  am.  I  have  seen  it  once,  if  you  want  to  spell 
out  what  that  represents. 

Mr.  Hanman.  Central  America  Co-op  Federation. 

Mr.  Weitz.  Do  you  want  to  take  a  minute? 

Mr.  Gage.  I  just  want  to  make  sure  Gary  is  answering  completely. 

Mr.  Hanman.  I  don't  know  of  any  legal  bills  to  these  people  you  are 
talking  about  from  CACF.  I  could  be  wrong. 

Senator  Montoya.  Would  you  check  on  that,  and  then  let  us  know  ? 

Mr.  Hanman.  Yes ;  I'd  be  glad  to  clieck  on  that. 


5899 

Mr,  Weitz,  Were  there  any  other  bills  that  were  submitted  to  you  by 
Jake  Jacobsen  tliat  did  not,  in  fact — invoices  that  did  not,  in  fact, 
represent  the  type  of  services  provided  ? 

Mr.  Hanman.  Yes.  There  were — you  will  notice  in  here  on  some  of 
these  that  he  was  abbreviated  in  his  billing,  and  in  some  cases  for  my 
own  purposes,  I  added  to  it  issues  on  which  I  had  consulted  him  about, 

Mr.  Gage.  Tliese  are  in  the  other  file  on  Jacobsen-Harrison. 

Mr.  Weitz.  I  take  it  he's  now  on  a  $l,500-a-month  retainer  ? 

Mr.  Hanman.  No  ;  he's  now  on  a  $500  retainer  from  Mid-Am.  It's 
under  review. 

Mr.  WErrz.  And  at  no  time  during  the  past  4  years,  to  your  knowl- 
edge, were  any  moneys  paid  to  either  Jake  Jacobsen  or  the  Harrison 
firm,  or  DeVier  Pierson  converted  to  cash  and  used  for  any  purposes 
related  to  Mid-America  or  ADEPT  or  any  political  purpose  that  you 
know  of  ? 

Mr.  Hanman.  No,  sir. 

Mr.  Weitz.  I  have  no  further  questions. 

Mr.  Elder,  In  the  event  we  do  have  some  questions  after  reviewing 
the  documents,  is  it  agreeable  that  we  can  call  you  on  the  phone  and 
discuss  it  ? 

Mr.  Hanman.  Firie,  sure;  if  it's  all  right  with  Mr.  Gage. 

Mr,  Gage.  WTiy  don't  you  call  me,  and  I  will  get  the  answers? 

Mr.  Elder.  OK. 

Mr.  Weitz.  Thank  you. 

Senator  Montoya.  Thank  you  very  much. 

[Whereupon,  at  4 :20  p.m.,  the  hearing  in  the  above-entitled  matter 
was  adjourned.] 


5901 


Hanman  Exhibit  No.  1 


HAKION  CDWYN   HARRISON 
CRNCST  GtNt  RCCVES 
ROBCRT  F.  SAGLC 
MTRON  SOlTER 


LAW  OFFICES 

Rbeves  &  Harrison 

SUITE  500 
I701   PENNSYLVANIA  AVENUE.  N    W. 

WASHINGTON,  D.  C.  20006 

TELEPHONE    202    29S-9030 

TELEX  ♦»0376  CRDK 

CABLE "REEVLAW" 


March  30,    1971 


Mr,    Gary  Haninan 

Executive  Vice-President  of  Marketing 

Mid-America  Dairymen,  Inc. 

P.  O.  Box  1837  S.S.S, 

Springfield,  Missouri  65805 

Dear  Gary: 

We  send  you  herewith  the  names  and  addresses 
of  nine  committees.   We  will  get  the  tenth  one  later. 
Please  don't  hold  up  waiting  for  it  because  we  need  a 
few  days. 


MEH:ek 
Enclosure 


f^ 


Ci>  w^- 


30-337  O  -  74  -  4 


5902 


Kick  Off  '72  Republican  Dinner 
Eisenhower  Center 
310  -  1st  Street,  S,E. 
Washington,  D.  C. 

Republican  National  Committee 
Eisenhower  Center 
310  -  1st  Street,  S.E, 
Washington,  D.  C. 

Republican  National  Finance  Committee 

Eisenhower  Center 

310  -  1st  Street,  S.E. 

Washington,  D.  C. 

Republican  National  Finance  Operations  Committee 

Eisenhower  Center 

310  -  1st  Street,  S.E. 

Washington,  D.  C. 

Republican  National  Associates 
Eisenhower  Center 
310  -  1st  Street,  S.E. 
Washington,'  D.  C. 

Republican  Victory  Committee 
Eisenhower  Center 
310  -  1st  Street,  S.E. 
Washington,  D.  C. 

Republican  Campaign  Committee 
Eisenhower  Center 
310  -  1st  Street,  S.E. 
Washington,  D.  C. 

Committee  for  a  Republican  Congress 
Congressional  Hotel 
300  New  Jersey  Avenue,  S.E. 
Washington,  D.  C. 

Republican  Congressional  Candidates  Conference 

Congressional  Hotel 

300  New  Jersey  Avenue,  S.E. 

Washington,  D.  C. 


5903 


Hanman  Exhibit  No.  2 


AGRICULTURE  &   DAIRY  EDUCATION   POLITICAL  TRUST 
p.  O.  BOX  1837  S.S.  STATION,  SPRINGFIELD,  MO.  65605     •      <I7    662-7071 


FROM:       Gary  Hanman 
DATE:        September  13,1971 


TO:    ADEPT  COMMITTEE 
Ken  Varner 
Dale  Hendricks 
Dale  Schaufelberger 
Gordon  Walle 
Edgar  Lampe 
Curtis  Phillips 

SUBJECT:    Quarterly  Report 


Attached  is  the  Quarterly  Report  filed  by  Trustee  Delano  for 
the  ADEPT  Fund. 

The  $15,  000  contributions- were  a  part  of  the  continuing 
commitment  which  we  had  with  the  Administration.     Several  administrative 
decisions,   favorable  to  dairy,    have  been  rendered  —  more  perhaps  than 
any  other  administration:     (1)    Restore  Special  School  Milk  Program; 
(2)  Curb  imports  in  four  major  categories,   with  the  over  47^  cheese  still 
being  considered;    (3)    Use  of  CCC  stocks  of  cheese  in  schools;    (4)    Export 
(bf  butter  (a  summary  of  this  program  attached);     (5)    Increase  in  price 
supports  by  27^^  per  cwt.  ;    (6)    Class  I  Base  Plan  promotion  deductions 
under  federal  milk  orders;    to  name  a  few. 


GH:bd 
Ends. 


5901 


OVERSEAS   JOTTER  SnlZS 

Week  of  May  17  1,139.437 

V«ak  of  Kay  24  2,844,058 

Week  cf  May  31  2,149,403 

Veek  o£  Jvne  7  3,114,083 

Week  of  Juno  14  2,288,317 

Voek  of  June  21  342,066 

Veek  of  June  28  1,077,531 

Week  cf  Jyly  5  1,197,358 

Week  of  July  12  1,264,174 

Week  of  July  19  199,910 

Week  of  J;uly  26  41,102 

Week  of  August  2  777,920 

(8/3-239,360) 
(8/4-538,560) 

Weak  of  August  9  578,544 

(8/10-308,040) 
(8/12-270,504) 

Week  or  August  16  1,063,137 

(8/17-386,484) 
(8/19-450,453) 
(8/20-226,210) 

Week  of  August  23  1,644,986 

(8/23-349,180) 
(8/24-223,229) 
(8/25-449,126) 
(8/26-399,677) 
(8/27-223,774) 

Veek  of  August  30                                     2,763,650 
(8/31-779, 2G0) 
(9/1-881,525) 
(9/2-437,825) 
(9/3-665,020)  

Total  to  date  22,485,686 


5905 
Hanman  ExraBiT  No.  3 


August  17,    19?2 


Mr.   Jake  Jacobsen 
Semer,    White  L  Jacobsea 
1156     15th  Street,   N.  W. 
WashingtoQ,    D,    C.   20005 


Dear  Jake: 

Attached  is  a  follow-up  letter  to  our  discussions  with  the 
Secretary.     1  realize  it  is  too  long,   but  it  was  difficult  for  me  to  explain 
this  complicated  subject  on  one  page.     If  you  think  it  is  too  long  for  the 
Secretary  to  grasp,   give  me  a  ring  and  we  will  redo  it. 

Sincerely  yours, 
MID-AMERICA  D/IRYMEN,   INC, 


GH:bd  Gary  Hanman 

Senior  Executive  Vice  President 
Attachment 


WEDNESDAY,  NOVEMBEB  14,   1973 

U.S.  Senate, 
Select  Committee  on 
Presidential.  Campaign  Activities, 

Washington,  D.C. 

The  Select  Committee  met,  pursuant  to  notice,  at  11  a.m.,  in  room 
G-334,  Dirksen  Senate  Office  Building. 

Present :  Senator  Joseph  M.  Montoya. 

Also  present :  Donald  Sanders,  deputy  minority  counsel ;  Alan  Weitz, 
assistant  majority  counsel. 

Senator  Montoya.  We  will  start  the  proceeding  now. 

Will  you  state  your  name  ? 

Mr.  Lilly.  Bob  A.  Lilly. 

Senator  Montoya.  Where  are  you  from,  Mr.  Lilly  ? 

Mr.  Lilly.  San  Antonio,  Tex. 

Senator  Montoya.  I  will  administer  the  oath. 

Will  you  raise  your  right  hand?  Do  you  solemnly  swear  that  the 
testimony  that  you  are  about  to  give  will  be  the  truth,  the  whole  truth, 
and  nothing  but  the  truth,  so  help  you  God  ? 

Mr.  Lilly.  I  do. 

Mr.  Weitz.  Senator,  let  the  record  show  that  Mr.  Lilly  has  been 
granted  use  immunity  by  the  U.S.  District  Court  for  the  District  of 
Columbia  this  morning,  and  is  appearing  and  will  testify  pursuant  to 
that  order. 

Senator  Montoya.  The  record  will  so  show. 

Mr.  Nicholas.  Might  it  also  show  that  he  appeared  with  his  counsel  ? 

Senator  Montoya.  Yes.  Let  the  record  also  show  that  he  has  ap- 
peared with  his  counsel,  and  will  you,  Mr.  Counsel,  state  your  name? 

Mr,  Nicholas.  My  name  is  Anthony  Nicholas,  attorney  at  law,  San 
Antonio,  Tex.,  and  I  represent  Mr.  Bob  A.  Lilly,  individually. 

Mr.  Weitz.  Mr.  Lilly,  for  the  record,  would  you  state  your  full  name 
and  address  ? 

TESTIMONY  OP  BOB  A.  LILLY,  ACCOMPANIED  BY  ANTHONY 
NICHOLAS,  COUNSEL 

Mr.  Lilly.  I  am  Bob  A.  Lilly,  130  Paloma,  P-a-1-o-m-a,  San  Antonio, 
Tex. 

Mr.  Weitz.  Let  me  just  say  in  general  that  whenever  names  or  other 
items  come  up  that  might  be  somewhat  obtuse,  that  they  ought  to  be 
spelled  for  purposes  of  the  record. 

Mr.  Lilly,  would  you  tell  us  of  your  earliest  connections  with,  first, 
MPI  and  then  AMPI  ? 

Mr,  Lilly.  Yes.  If  I  might,  I  have  a  short  brief  here  that  more  or  less 
describes  it. 

Mr,  Weitz.  Is  that  a  statement  you  have  ? 

( .5907 ) 


5908 

Mr.  Lilly.  Yes.  I  might  read  it  as  far  as  I  am  concerned. 

Mr.  Wettz.  Fine. 

Mr.  Lilly.  My  name  is  Bob  Lilly.  I  reside  at  130  Paloma,  San  An- 
tonio, Tex.  I  am  employed  by  Associated  Milk  Producers,  Inc.  and 
National  Dairymen's  Cooperative  with  approximately  40,000  pro- 
ducers in  21  States,  headquartered  in  San  Antonio,  Tex. 

My  title  is  secretary  of  the  Committee  for  Thorough  Agricultural 
Political  Education,  abbreviated  as  TAPE,  and  legislative  director 
for  AMPI,  abbreviation  for  Associated  Milk  Producers,  Inc. 

As  secretary  of  the  Committee  for  TAPE,  I  am  responsible  for  rec- 
ords of  contributions,  receipts,  expenditures,  reports,  and  correspond- 
ence relating  to  the  Committee  for  TAPE.  As  legislative  director,  I 
work  with  State  legislators  as  well  as  employees  in  the  AMPI  regions 
charged  with  similar  responsibilities ;  State  regulatory  agencies,  such 
as  health  authorities,  animal  health  authorities,  pollution  prevention 
agencies,  as  well  as  comparable  Federal  regulatory  agencies.  And  I 
also  work  on  national  legislation. 

I  have  been  associated  with  the  dairy  industi-y  since  early  1965.  In 
1965,  I  was  employed  by  North  Texas  Producer's  Association,  a  dairy 
cooperative  headquartered  at  Arlington,  Tex.  In  1967,  at  the  forma- 
tion of  Milk  Producers,  Inc.,  the  North  Texas  Producers  Cooperative 
became  a  part  of  AMJPI,  along  with  other  cooperatives  in  Texas, 
Oklahoma,  Kansas,  Arkansas,  Tennessee,  and  New  Mexico  with  ap- 
proximately 12,000  members. 

Later,  in  19G8,  Associated  Milk  Producers,  Inc.,  AMPI,  was  formed 
with  approximately  30,000  members,  and  in  time  grew  through  con- 
solidation to  its  present  size  of  about  40,000  members.  I  served  as  an 
assistant  to  the  general  manager  of  MPI  and  AMPI  until  early  1972, 
when  there  was  a  change  in  management. 

Since  that  time,  I  have  seived  in  my  present  capacity. 

Mr.  Weitz.  Thank  you. 

Mr.  Lilly,  what  were  the  positions  of  Mr.  Nelson — what  was  the 
position  of  Mr,  Nelson  during  the  period  of  1967  forward? 

Mr.  Lilly.  He  was  general  manager  of  Milk  Producers,  Inc.,  and 
later  Associated  Milk  Producers,  Inc.  until  early  1972,  January  1972. 

Mr.  Weitz.  If  you  have  no  objection,  I  think  we  can  refer  alter- 
nately to  Milk  Producers,  Inc.,  as  MPI,  and  Associated  Milk  Pro- 
ducers, Inc.,  as  AMPI,  and  TAPE,  T-A-P-E,  and  Committee 
for  TAPE  as  either  TAPE  or  CTAPE. 

Mr.  Lilly.  That  is  fine.  That  would  be  easier  for  me. 

Mr,  Weitz,  Can  you  tell  us  what  position  Mr.  Isham,  I-s-h-a-m,  held 
during  that  period  ? 

Mr.  Lilly.  Yes.  Mr.  Isham  held  the  position  of  comptroller  for 
AMPI  during  the  entire  period  until  a  change  in  management  in 
1972,  and  following  that,  at  about  that  time,  or  shortly  thereafter, 
he  was  named  as  associate  general  manager  and  was  replaced  as  comp- 
troller, and  was  one  of  two  associate  general  managers  to  the  cur- 
rent or  present  general  manager,  George  Mehren. 

Mr.  Weitz.  M-e-h-r-e-n  ? 

Mr.  Lilly.  M-e-h-r-e-n. 

Mr.  Weitz.  "V^Hio  was  the  other  associate  general  manager,  or  at 
that  time  who  was? 


5909 

Mr.  Lilly.  At  that  time  and  presently  still  is  associate  general  man- 
ager, A.  L.  McWilliams,  M-c-W-i-1-l-i-a-m-s. 

Mr.  Weitz.  Is  there  a  second  general  associate  manager  at  this 
time  ? 

Mr.  Lilly.  Not  since  Mr.  Isham  left  AMPI  several  months  ago. 
He  resigned  and  there  has  been  no  replacement  for  him  in  the  associ- 
ate general  manager's  squad. 

Mr.  Weitz.  Did  Mr.  Isham  also  hold  a  position  with  MPI  ? 

Mr.  Lilly.  He  held  the  comptroller  position  with  MPI. 

Mr.  Weitz.  So  both  with  MPI  and  AMPI  ? 

Mr.  Lilly.  Eight. 

Mr.  Weitz.  Can  you  tell  us  the  position  or  positions  that  Mr, 
David  Parr,  P-a-r-r,  held  from  1967  forward  ? 

Mr.  Lilly.  This  is  rather  difficult.  He  was  rather  outspoken  in  not 
wanting  a  title.  He  would  come  as  near  being  an  assistant  general 
manager  as  I  could  possibly  think  of  anything  being,  but  he  actually 
reque^:ed  that  he  have  no  title.  He  was  constantly  with  Mr.  Nelson, 
advising  with  him. 

So  I  M^ould  say  that  he  dealt,  even  though  he  did  not  have  the  title, 
in  the  capacity  of  assistant  general  manager. 

Mr.  Weitz.  Do  you  know  what  his  formal  title  was  during  that 
period  of  time  ? 

Mr.  Lilly.  As  far  as  I  know,  he  had  no  formal  title. 

Mr.  Weitz.  He  was  not,  for  example,  a  division  manager  for  Arkan- 
sas? 

Mr.  Lilly.  You  are  right.  I  am  sorry.  At  the  time  we  put  MPI  to- 
gether, the  CAMPA  group  that  is  Central  Arkansas  Milk  Producers 
Association,  became  a  part  of  MPI,  and  during  a  brief  period  of  1967 
until  1968,  until  we  created  AMPI,  he  served  as  division  manager  of 
that  group. 

But  prior  to  that  time,  he  was  manager  of  the  CAMPA  group. 

Mr.  Weitz.  And  when  did  they  merge  with  AMPI  ?  Did  he  remain 
a  division  manager  of  AMPI,  or 

Mr.  Lilly.  No;  he  remained  in  Little  Rock  as  far  as  his  residence 
and  his  business  place  of  operation  was  concerned.  Certainly,  he  had 
a  great  deal  of  influence  on  what  went  on  in  that  particular  division, 
and  it  was  maintained  as  a  division.  But  he  did  not  have  the  title  of 
division  manager. 

I  am  not  sure  who  succeeded  him  in  that  capacity,  but  he  moved 
into  a  different  relationship. 

Mr.  Weitz.  Can  you  tell  us,  if  you  know,  what  assistance  Mr.  Parr 
had  in  Little  Rock  throughout  this  time,  from  time  to  time  ? 

Mr.  Lilly.  He  had  Keiffer,  K-e-i-f-f-e-r,  Howard,  Joe  Johnson, 
J-o-h-n-s-o-n,  Forest,  F-o-r-e-s-t,  Wisdom,  Bob  Justice,  J-u-s-t-i-c-e, 
Tom  Townsend.  T-o-w-n-s-e-n-d,  Joe  Murphey,  M-u-r-p-h-e-y.  I  think 
that  I  have  covered  most  of  them. 

Mr.  Weitz.  All  right. 

Now,  we  are  turning  to  you.  Could  you  tell  us  what  your  relation- 
ship was  with  Mr.  Nelson  ?  For  example,  you  defined  what  your  area 
of  responsibility  was. 

Could  you  tell  us  your  contact  with  Mr.  Nelson  in  general  during 
this  period? 


5910 

Mr.  LiiXY.  Of  course,  during  this  time  as  an  assistant  to  the  general 
manager,  it  covered  practically  anything  which  may  or  may  not  come 
up;  that  put  me  in  close  working  relationship  with  Bob  Isham  as 
comptroller,  Avith  Dsive  Parr  in  the  capacity — he  served  with  the  divi- 
sion managers  we  had  actually  named  as  division  managers.  And  we 
had  a  number  of  division  managers. 

At  a  later  date,  we  created  regions,  which  is  a  higher  level  than  a 
division,  in  close  contact  with  the  regional  managers  as  to  what  was 
going  on — telephone  conversations  througli  me  directly  with  Mr. 
Nelson  on  some  plant  problem  or  some  legislative  problem  or  what- 
ever the  problem  might  be;  also  lather  closely  tied  to  TAPE  at  that 
time  doing  lobbying  activities  at  a  much  higher  level — not  at  a  higher 
level,  that  is  a  poor  choice  of  words — but  at  a  more  intensified  etfort 
than  under  Dr.  Mehren. 

And  I  might  say  that  whatever  might  fall  within  the  realm  of  an 
assistant  to  the  general  manager  of  a  large  national  cooperative — I 
mean,  that  would  fit  within  my  capacity. 

Mr.  Weh'z.  Were  there  any  other  persons  in  approximately  your 
position  with  regard  to  Mr.  Nelson  ? 

Mr.  Lilly.  No;  Mi.  Nelson,  at  tlie  time  of  the  creation  or  formation 
of  MPI  and  later,  AMPI,  refused  to  leave  San  Antonio  and  move  to 
Dallas,  Tex.,  where  the  board  wanted  to  have  the  office.  And,  in  fact, 
I  moved  to  San  Antonio  in  April  of  1968,  and  was  there  for  approxi- 
mately a  year  and  a  half  before  any  of  the  other  people  within  MPI, 
later  AMPI,  moved  to  San  Antonio. 

So,  the  two  of  us  were  togetlier  for  well  over  1  year. 

Mr,  Weitz.  You  and  Mr.  Nelson  ? 

Mr.  Lilly.  That  is  right. 

Mr.  Weitz.  Who  was  liis  secretaiy  at  that  time? 

Mr.  Ln.LY.  A  lady  by  the  name  of  Madeline,  M-a-d-e-1-i-n-e,  that  is 
probably  miss])elled,  P-i-1-l-o-t. 

Mr.  Weitz.  Did  you  have  a  secretary  ? 

Mr-  Lilly.  I  had  a  secretary.  I  used  Madeline  Pillot,  and  had  a  sec- 
retary by  the  name  of  Sarah  Bezdek,  B-e-z-d-e-k. 

Mr.  Weitz.  For  what  period  of  time  did  Sarah  Bezdek  serve  as  your 
secretary  ? 

Mr.  Lilly.  From  my  time  moving  to  San  Antonio  in  1968,  either  she 
or  Madeline  Pillot,  later  Sarah  Bezdek,  entirely  up  until  March  of 
1972. 

Mr.  Weitz,  And  after  that  time  ? 

Mr.  Lilly.  After  that  time,  I  have  used  Annette,  A-n-n-e-t-t-e,  Tom- 
isini,  T-o-m-i-s-i-n-i,  curently  my  secretary. 

Mr.  Weitz.  Do  you  know  who  succeeded  Madeline  Pillot  as  Mr. 
Nelson's  secretary  ? 

Mr.  Lilly.  Yes ;  a  lady  by  the  name  of  Jane  Wright,  W-r-i-g-h-t. 

Mr.  Weitz.  Do  you  know  when  she  replaced  Pillot  ? 

Mr.  Lilly.  No  ;  I  do  not. 

Mr.  Weitz.  Did  Jane  Wright  continue  on  as  Mr.  Nelson's  secretary 
until  he  was  removed  as  general  manager? 

Mr.  Lilly.  I  think  just  prior  to  his  being  removed  as  general  man- 
ager, Jane  Wright  left  him  probably  and  went  with  an  insurance 
company.  It  possibly  could  have  been  immediately  after.  I  mean,  I 
could  not  give  you  a  date. 


5911 

Mr.  Weitz.  I  see. 

Do  you  know  where  Ms.  Wright  is  located  now  ? 

Mr.  Lilly.  She  is — I  saw  her  just  a  day  or  two  ago.  I  know  she  is 
still  working  with  the  insurance  company,  and  she  lives  in  Olmos 
Park  in  San  Antonio,  as  far  as  the  residence  is  concerned. 

Mr.  Weitz.  Do  you  know — what  about  Pillot  ? 

Mr.  Lilly.  She  lives  in  New  Braunf els,  Tex. 

Mr.  Weitz.  Where  does  Sarah  Bezdek  live  ? 

Mr.  Lilly.  In  San  Antonio,  I  am  not  sure  of  the  address. 

Mr.  Weitz.  I  would  like  to  move  to  some  questioning  concerning 
the  formation  of  TAPE.  Can  you  tell  us  what  the  purpose  of  TAPE 
was  and  who  was  instrumental  in  its  formation  ? 

Mr.  Lilly.  Of  course  the  purpose  of  TAPE  was  to  provide  a  ve- 
hicle for  our  dairy  farmer  members — the  purpose  of  TAPE  was  to 
provide  a  vehicle  that  dairy  farmers  could  make  political  contribu- 
tions, and  it  was  so  designed  that  they  would  contribute  under  $100 
to  prevent  and  to  avoid  having  to  report  their  names  and  addresses 
at  that  time  to  the  Clerk  of  the  House. 

And  in  our  handling,  dairy  farmers  were  paid  in  such  a  way — w© 
handled  their  moneys  for  them  for  the  milk  that  they  sold  during  the 
month,  and  they  would  sign  an  authorization  for  us  to  make  a  deduc- 
tion out  of  their  checks.  We  originally  started  out  at  one-third  of  1 
percent,  and  I  could  not  tell  you  truthfully  why  we  were  tied  up  on 
that. 

When  they  would  reach  $99.96,  then  they  would  be  cut  off  and 
contribute  nothing  further  during  the  year.  These  moneys  were  used 
to  contribute  to  State  and  Federal  candidates  for  political  office.  The 
formation  of  it  first  started  in  1968.  We  had  a  number  of  attorneys. 

I  remember  DeVier  Pierson  had  some  comments  on  it.  There  was 
some  correspondence  on  his  thoughts  and  ideas.  Ted  Van  Dyk,  that's 
V-a-n  D-y-k,  had  some  input  into  it  through  correspondence  and 
ideas  as  to  how  it  should  be  organized.  Mr.  Jake  Jacobsen,  J-a-c-o-b- 
s-e-n,  Austin,  Tex.,  had  some  input  into  it;  possibly  other  attorneys. 
These,  I  can  remember. 

As  to  how  it  should  be  structured  and  organized,  we  fina^lly  deter- 
mined to  set  it  up  as  a  trust  in  the  true  sense  of  the  word.  It  was 
originally  entitled  "Trust  for  Agricultural  Political  Education,"  with 
Robert  Isham,  our  comptroller,  as  sole  trustee  of  the  fund. 

The  first  deposits  started  in  1968.  The  actual  first  collection  of  the 
first  deposit  was  made  in  March  of  1969. 

Mr.  Weitz.  Was  there  a  committee  for  TAPE  that  had  some 
function  ? 

Mr.  Lilly.  There  was  a  committee  for  TAPE.  We  had  it  at  that 
particular  time.  I  believe  we  had  four  regions  within  AMPI,  and  each 
region,  if  my  memory  serves  me  correctly,  had  two  representatives 
that  were  directors  on  AMPI's  board,  corporate  board  members,  as 
we  referred  to  them  as. 

It  was  not  a  committee  in  tlie  true  sense  of  the  word.  They  would 
make  the  determinations  about  where  money  would  be  spent.  They 
certainly  could  make  requests.  Their  requests  were  probably  accepted 
and  moneys  were  expended  to  the  regions  which  they  recommended. 

But  for  the  most  part,  the  committee  functioned  as  a  committee  that 
we  reported  to  after  the  fact,  when  we  would  report  to  the  Clerk  of  the 


5912 

Plouse,  at  that  time  sometimes  on  a  quarterly  basis,  and  very  similar  to 
the  reporting  date  now.  We  would  give  the  committee  a  copy  of  the 
report,  who  we'd  made  contributions  to,  but  it  was  an  after  the  fact 
thing  rather  than  a  before  the  fact  thing. 

In  other  words,  we  did  not  have  to  have  their  permission  at  that  par- 
ticular time,  at  the  inception  of  TAPE  to  make  a  contribution. 

Mr.  Weitz.  The  TAPE  committee  was  nuide  up  of  dairy  farmers 
who  were  members  of  TAPE  ? 

Mr.  Lilly.  Right. 

Mr.  Weitz.  Weie  all  of  them  members  of  the  board  of  directors  of 
AMPI? 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  Under  the  trust  agreement,  is  it  not  true  that  Mr.  Isham 
had  sole  legal  responsibility  for  the  dispensation  of  the  funds? 

Mr.  Lilly.  That  is  true. 

Mr.  WEirz,  In  practice,  who  controlled  the  dispensation  of  funds 
or  who  made  the  decisions  as  to  contributions  ? 

Mr.  Lilly.  For  the  most  part,  myself,  Mr.  Nelson,  Mr.  Parr,  Mr. 
W.  R.  Griffith,  G-r-i-f-f-i-t-h,  a  director  from,  I  will  say,  Oklahoma, 
New  Castle,  Okla. ;  probably  othei-s,  but  those  were  the  major  people. 

Mr.  Weitz.  Is  Mr.  Griffith  a  member  of  the  TAPP^  committee? 

Mr.  Lilly.  Yes,  he  was  chairman  of  the  TAPE  committee,  and  as  a 
matter  of  fact,  he  is  chairman  of  the  Committee  for  TAPE  noAv/ 

Mr.  Weitz.  Now,  you  said  that  you,  Mr.  Parr,  Mr.  Nelson,  and  Mr. 
Griffith  had  actual  responsibility.  If  you  were  to  estimate  who  made 
the  majority  of  the  decisions,  could  you  make  such  an  estimate? 

Mr.  Lilly.  I  would  say  that  Mr.  Nelson  and  Mr.  Parr,  between  the 
two  of  them,  made  80  to  90  per-cent  of  the  decisions. 

Mr.  Weitz.  How  many  instances  do  you  i-ecall  in  which  you  made  a 
decision  for  a  particular  contribution  without  consulting  with,  either 
Mr.  Nelson,  or  Mr.  Parr? 

Ml'.  Lilly.  I  remember  one  instance  quite  well. 

Mr.  Weitz  >  Only  one  now  ? 

Mr.  Lilly.  I  am  sure  there  were  othei-s.  One  particularly  comes  to 
my  mind,  but  I  am  sure  thei'e  were  other  contributions  I  made  with- 
out consulting  with  them. 

Mr.  Weitz.  Were  there  contributions  that  were  made  on  the  author- 
ity of  either  Mr.  Nelson  or  Mr.  Parr,  in  which  they  did  not  ask  yofur 
advice  or  otherwise  consult  with  you  ? 

Mr.  Lilly.  Yes,  ye^. 

Mr.  Weitz.  Numerous  occasions? 

Mr,  Lilly.  When  they  asked  my  advice,  they  might  have  told  me 
that  they  were  going  to — in  most  instances,  I  was  aware  that  they 
were  going  to,  I  might  disagre^e  or  agree,  but  that  had  no  bearing 
on  it.  I  think  in  most  instances  I  was  aware  of  it. 

Mr.  Weitz.  You  would  say  that  perhaps  Mr.  Nelson,  and  to  a 
lesser  extent,  Mr.  Parr,  had  final  authority  with  regard  to  contri- 
butions ? 

Mr.  Lilly.  Insofar  as  I  am  concerned,  Mr.  Nelson  had  final 
authority. 

Mr.  Weitz.  Did  Mr.  Isham,  or  you,  or  anj^one  else  make  reports  to 
the  TAPE  committee,  other  than  those  reports — copies  of  the  reports 
to  the  Clerk  of  the  House  ? 


5913 

Mr.  Lilly.  Mr.  Isham  did.  Usually  my  assistants  or  my  help  would 
be  sure  that  he  had  it  properly- 

Mr.  WErrz.  How  frequently  did  he  make  such  reports? 

Mr.  Lilly.  There  was  a  report  required  at  the  end  of  February  of 
each  year,  the  end  of  May  of  each  year,  the  end  of  June — I  mean 
August — of  each  year,  and  the  end  of  December.  It  was  very  similar 
to  what  it  is  now  with  the  Clerk  of  the  House. 

Mr.  Weitz.  You're  talking  about  reports  to  the  Clerk  of  the  House, 
but  did  he  make  independent  reports  to  the  committee  ? 

Mr.  Lilly.  Mr.  Isham  or  myself  would  make  reports  to  the  com- 
mittee ;  sometimes,  Mr.  Isham,  sometimes  he  was  not  even  along  and 
I  would  make  the  report  to  the  committee  at  about  the  same  time  or 
shortly  thereafter  when  we  made  a  report  to  the  Clerk  of  the  House. 

Mr.  Weeitz.  I  see. 

But  you  would  not  consult— you  or  Mr.  Isham  would  not  consult 
with  members  of  the  TAPE  committee  beforehand  as  to  particular 
contributions  ? 

Mr.  Lilly.  In  some  instances,  if  we  were  going  to  contribute  in 
Oklahoma,  Mr.  Griffith  lives  in  Oklahoma,  and  if  we  were  going  to 
make  a  contribution  decision,  we  would  contact  him  and  be  sure  that 
we  were  not  going  to  have  his  ire  raised  because  of  a  contribution 
we  might  make  in  Oklahoma;  the  same  thing  in  Kansas  or  any  of 
the  States.  We  usually  would  try  to  check  with  someone,  but  not  in 
all  instances. 

Mr.  Weitz.  I  see. 

Did  the  TAPE  committee  meet  as  a  committee  from  time  to  time? 

Mr.  Lilly.  No;  not  the  TAPE  committee. 

Mr.  Weitz.  Were  there  reports  made  as  to  TAPE  contributions 
to  the  board  of  directors  of  AMPI? 

Mr.  Lilly.  No;  it  was  kept  totally  separate  and  apart,  and  to  my 
knowledge,  during  the  period  of  TAPE,  I  do  not  think  the  minutes 
will  reflect  any  report  having — AMPI  boards  minutes  will  not  reflect 
any  report  having  been  made.  And  I  think  this  would  hold  true  until 
after  the  change  in  the  law  in  1972,  when  the  new  election  code  came 
into  effect. 

Mr.  Weitz.  You  say  the  minutes  would  not  reflect,  I  take  it,  a 
formal  or  oral  report.  To  your  knowledge,  were  there  informal,  off- 
the-record  reports  made  to  the  AMPI  board  by  anyone  knowledgeable 
as  to  TAPE  contributions? 

Mr.  Lilly.  Tliere  would  be,  not  as  to  who  might  have  been  con- 
tributed to.  A  question  might  have  been  raised  informally  by  a  board 
member,  had  a  contribution  been  made  to  someone,  or  what  contribu- 
tions had  been  made,  or  how  much  money  TAPE  had  as  far  as  balances 
were  concerned.  And  these  things  would  usually  be  answered  in  an 
informal,  off-the-record,  insofar  as  AMPI  minutes — ^board  minutes 
were  concerned. 

Mr.  Weitz.  I  see. 

I  would  like  to  move  to  the  period  December  1968.  Are  you  aware  of 
or  do  you  know  anything  concerning  a  transaction  in  which  funds  were 
delivered  through  one  or  more  persons  to  Maurice  Stans? 

Mr.  Lilly.  I  am  unaware  of  any  moneys  having  been  moved  in  1968. 

Mr.  Weitz.  This  is  December  of  1968. 

Mr.  Lilly.  I  am  totally  unaware  of  it. 


5914 

Mr.  Weitz.  And  you  neither  discussed  tliis  with  Mr.  Isham  or  any- 
one elvSe,  or  were  never  told  of  any  such  transaction  'i 

Mr.  Lilly.  I  certainly  have  no — I  mean,  t-o  the  best  of  my  recollec- 
tion, I  have  no  knowled^i^e,  no  notes.  It  is  a  blank  space  in  mv  mind. 

Mv.  Wkitz.  All  ri<_rht.' 

Xext,  I  would  like  to  ask  you  about  the  transaction  in  1969,  that 
culminated  in  a  payment  of  $100,000  to  ]Mr.  Kalmbach. 

WouKl  you  like  to  tell  us  how  that  transaction  began,  and  what  you 
know  of  it? 

Mr.  Lilly.  Yes. 

Is  it  permitted  for  me  to  read  this  [indicating]  to  cover  what  I  have? 

Mr.  Wkitz.  Go  right  ahead. 

Mr.  Lilly.  In  late  July  of  1969,  I  was  directed  by  Harold  Nelson  to 
deliver  $100,000  cash  to  Milton  Seiner,  S-e-m-e-r,  a  Washington.  D.C, 
attorney.  I  was  informed  at  the  time,  or  perhaps  a  little  later  by  Mr. 
Nelson,  or  Dave  Parr,  P-a-r-r,  that  the  purpose  of  the  $100,000,  which 
was  ultimately  to  be  delivered  to  Herbert  Kalmbach  was  to  offset  an 
AMPI  personnel  activity  with  the  Democratic  Party  in  the  1968  Presi- 
dential election,  and  also  to  get  the  favorable  attention  of  the 
Republicans. 

I  was  told  to  contact  the  Citizens'  National  Bank  in  Austin,  Tex., 
the  depository  for  our  political  TAPE  fimds,  and  work  out  details.  I 
spoke  with  Mr.  Marvin  Stetler,  president  of  the  bank,  that  is  S-t-e-t- 
l-e-r.  Apparently,  Mr.  Stetler  was  told  tlie  transaction  by  Mr.  Nelson 
prior  to  my  conversation  with  Mr.  Stetler,  who  told  me  that  it  would 
take  several  days  to  accumulate  this  amount  in  $100  bills,  because  it 
would  have  to  be  gathered  from  several  banks  in  order  to  avoid 
arousing  iXyn,  interest  of  the  Federal  bank  authorities. 

The  money  was  debited  to  the  account  of  TAPE,  the  political  arm 
of  AMPL  This  required  the  approval  of  Robert  O.  Isham.  a  tnistce  for 
TAPE.  It  is  probable  that  Mr.  Isham  discussed  the  transaction,  but  I 
do  not  recall  any  conversation.. 

x\t  this  time,  I  was  located  in  the  San  Antonio  office,  and  Mr.  Isham 
was  located  in  the  Dallas  office.  I  was  called  by  Mr.  Stetler  and  told 
that  the  $100,000  would  ])e  ready  on  August  1,  1969.  I  notified  Mr. 
Semer  in  Washington,  D.C,  and  we  arranged  to  meet  in  Dallas,  Tex. 

On  August  1,  1969.  I  went  to  Austin,  I  went  to  Mr.  Stetler's  office 
in  the  Citizens'  National  Bank.  Mr.  Stetler  counted  $100,000  in  $100 
bills  in  my  presence,  and  I  then  signed  a  debit  memo  acknowledging 
receipt  of  $100,000  cavSh,  this  fii'st  day  of  August  1969,  per  instructions 
of  Bob  Isham,  that  is  I-s-h-a-m. 

The  money  was  placed  in  a  briefcase.  I  took  it  and  went  to  the  air- 
port, and  flew  to  Dallas,  Tex.  I  do  not  remember  if  I  went  by  commer- 
cial airline,  or  in  the  AMPI  private  plane.  The  plane  landed  at  Love 
Field,  and  I  went  by  taxi  to  the  Executive  Inn. 

I  called  Milt  Semer's  room,  and  he  asked  me  to  come  to  his  room, 
which  I  did.  I  gave  Mr.  Semer  the  briefcase  containing  the  $100,000. 
He  did  not  count  the  money,  nor  did  he  give  me  a  receipt. 

At  a  later  date,  several  weeks  as  I  remember.  I  saw  Mr.  Semer  in 
Washington,  D.C.  and  he  told  me  he  had  left  my  briefcase  in  Cali- 
fornia, indicating  to  me  that  the  money  had  been  delivered.  Sometime 
after  this  it  was  decided  that  no  contribution  exceeding  $5,000  should 


5915 

have  been  made  under  the  then  existing  statute  to  any  one  individual 
or  committee  in  any  one  year. 

I  do  not  know  who  made  this  decision  or  when  it  was  made.  In 
December  of  1969,  Mr.  Nelson  discussed  with  me  ways  to  show  the 
$100,000  contributed  in  an  acceptable  manner.  I  suggested  that  the 
$100,000  be  returned  to  us,  and  we  then  give  20  State  Republican  com- 
mittees $5,000  each,  and  they  could  in  turn  pass  the  money  back  to 
Kalmbach.  This  suggestion  was  ruled  out  by  Mr.  Nelson,  and  I  got 
the  clear  impression  that  this  approach  had  been  discussed  outside  the 
office  and  had  been  vetoed,  probably  by  someone  close  to  the  admin- 
istration. 

I  then  suggested  that  if  the  State  committees  were  not  to  be  trusted 
to  do  this,  that  20  special  committees  be  appointed.  This  idea  was  also 
turned  down. 

The  final  decision  was  that  I  should  borrow  $100,000  from  the  Citi- 
zens' National  Bank  in  Austin,  Tex.  This  was  to  be  deposited  to  the 
TAPE  account.  Then  a  TAPE  check  in  the  amount  of  $100,000  was  to 
l>e  used  to  purchase  a  $100,000  non-interest-bearing  CD  to  be  held  by 
the  bank  as  collateral  for  my  personal  note. 

The  personal  note  was  executed  on  December  17,  1969,  for  60  days, 
and  I  deposited  the  $100,000  to  the  TAPE  account  on  December  17, 
1969.  A  TAPE  check  purchasing  $100,000  non-interest-bearing  CD 
was  issued  on  December  19, 1969,  and  cleared  the  bank  on  December  22, 
1969. 

Mr.  Weitz.  Off  the  record  for  a  minute. 

[Discussion  off  the  record.] 

Mr.  Weitz.  Let's  go  on  the  record. 

Mr.  Nicholas.  Bob,  do  you  recall  how  you  were  advised,  if  you  were 
so  advised,  as  to  how  to  get  a  hold,  as  to  why  to  get  a  hold  of  Mr. 
Semer?  I  mean,  do  you  have  any  recollection  of  that,  or  did  you  know 
Mr.  Semer  ? 

Mr.  LiixY.  I  knew  Mr.  Semer  by  name  of  the  Jacobsen,  Semer  and 
White  law  firm  in  Washington,  D.C,  because  I  had  an  appointment 
with  Mr.  Jacobsen.  Possibly  I  had  met  Mr.  Semer,  but  I  am  not  sure 
that  I  had. 

And  why  I  contacted  him^ — is  this  what  you  are  asking? 

Mr.  Nicholas.  You  said  that  you  contacted  Mr.  Semer  for  the  pur- 
pose of  delivering  to  him  the  $100,000  that  was  given  to  you  through 
the  debit 

Mr.  Lilly.  Memo. 

Mr.  Nicholas.  Memo  from  TAPE.  Is  that  correct? 

Ml'.  Lilly.  Yes. 

Mr.  Nicholas.  My  question  is  this,  Avere  you  told  to  contact  Mr. 
Seiner  ?  Did  Mr.  Semer  contact  you  ? 

Mr.  Lilly.  I  was  told  to  contact  Mr.  Semer. 

Mr.  Nicholas.  Who  told  you  that  ? 

Mr.  Lilly.  Mr.  Nelson. 

Mr.  Nicholas.  Mr.  who? 

Mr.  T^iLLY.  Nelson. 

Mr.  Nicholas.  Harold  A.  Nelson  ? 

Mr.  Lilly.  Yes. 

^Ir.  Nicholas.  How  was  the  contact  made  ? 


5916 

Mr.  Lilly.  Truthfully,  I  do  not  remember.  I  would  have  to  assume 
it  was  by  phone. 

Mr.  Nicholas.  Anyway,  Mr.  Nelson  told  you  to  make  the  contact? 

Mr.  Lilly.  That  is  right. 

Mr.  Nicholas.  The  other  question  is  this,  was  there  any  discussion 
between  you  and  Mr.  Nelson  or  anyone  else  as  to  why  the  $100,000 
was  being  delivered  or  given  to  Mr.  Herbert  Kalmbach  ?  I  mean,  did 
somebody  just  say,  "Well,  we  are  going  to  give  them  $100,000,"  or  was 
there  some  reason  for  it '? 

Mr.  Lilly.  I  mentioned  just  briefly  in  my  statement,  it  was  to  get 
the  attention  of  the  Republicans,  since  we  had  worked  rather  heavily 
in  the  Democratic  Party,  and  we  needed  to  get  their  attention. 

Mr.  Nicholas.  You  say,  "we"  needed  to  get  their  attention.  Whose 
idea  was  this  ? 

Mr.  Lilly.  This  was  a  conversation  that  did  take  place  outside  of 
the  office.  I  do  know  that  Mr.  Parr,  Dave  Parr,  was  aware  of  this.  1 
know  that  Mr.  Jake  Jacobsen  was  aware  of  this.  I  know  that  Mr. 
Nelson  was  aware  of  this. 

Who  else  might  have  been  contacted,  I  do  not  know.  Those  three 
people,  I  am  awai-e  tliat  they  were  involved,  and  had  knowledge  of 
it,  and  had  talked  about  it  outside;  possibly,  there  had  to  be  other 
people  as  well, 

Mr.  Nicholas.  This  was  the  1969 — I  am  going  to  use  the  word  "con- 
tribution"  

Mr.  Lilly.  OK. 

Mr.  Nicholas  [continuing].  Of  $100,000.  Now,  as  I  understand,  1969 
was  not  an  election  year. 

Mr.  Lilly.  That  is  true. 

Mr.  Nicholas.  And  1968  was  an  election  year. 

Mr.  Lilly.  That  is  right. 

Mr.  Nicholas.  And  that  is  when  Mr.  Nixon  ran  against  Mr.  Hum- 
phrey. -  ' 

Mr.  Lilly.  Right. 

Mr.  Nicholas.  And  Mr.  Nixon  beat  Mr.  Humphrey? 

Mr.  Lilly.  Yes. 

Mr.  Nicholas.  And  the  milk  industry,  as  I  understand  it,  supported 
Mr.  Humphrey  heavily,  right? 

Mr.  Lilly.  That  is  true. 

Mr.  Nicholas.  Was  there  any  discussion  as  to  what  this  $100,000 
was  for  ? 

Mr.  Lilly.  No. 

Mr.  NiCHor^s.  Well,  was  it  a  political  contribution  ? 

Mr,  Lilly.  Outside  of  what  my  statement  covers,  I  mean  this  is 
ahont  the  onlv  knowledge  that  T  have  as  to  what  it  was  for. 

Mr.  Nicholas.  Was  it  to  pay  anybody  back,  or  to  pay  otf  political 
campaigns,  or  was  there  any  mention  about  getting  your  foot  in  tlio 
door,  or 

Mr.  LiM.y.  To  gain  their  attention,  T  mean,  that  would  be  to  get 
your  foot  ill  tlie  door  to  me. 

Mr.  Nicholas.  What  I  Avant  to  know  is  wliose  idea  was  it  while  we 
are  on  the  record,  and  while  we  are  heiv.  T.,et  me  a.sk  you  wliethei-  it 
■was  your  idea? 


I 


5917 

Mr.  Lilly.  No,  it  was  Mr.  Nelson's  idea  insofar  as  I  am  concerned, 
but  he  told  me  and  directed  me  to  do  it. 

Mr.  Nicholas.  Mr.  Nelson  told  you  to  do  it  ? 

Mr.  Lilly.  Right. 

Mr.  Nicholas.  Go  ahead. 

Mr.  Weitz.  Before  the  payment  was  to  be  made,  did  you  attend  any 
meetings  at  which  this  matter  was  discussed  ? 

Mr.  Lilly.  Not  that  I  recall. 

Mr.  Weitz.  So  Mt.  Nelson  told  you  about  this  individually  ? 

Mr.  Lilly.  I  know  that  he  talked  about  this  to  me  individually.  I 
am  under  the  impression  that  Mr.  Isham  could  well  have  been  present 
at  some  of  the  discussion  when  this  was  discussed  with  Mr.  Nelson. 

My  notes — what  few  notes  I  have — do  not  indicate  it.  I  know  that 
Mr.  Isham  is  aware  of  it  and,  of  course,  Mr.  Isham  was  in  Dallas.  I 
was  in  San  Antonio.  It  is  quite  possible  we  could  have  discussed  it, 
either  on  the  phone  or  in  person. 

We  must  have  had  discussions  between  Mr.  Isham  and  myself,  and 
probably  between  Mr.  Nelson,  but  I  cannot  remember. 

Mr.  Weitz.  Why  do  you  say  that  you  must  have  had  a  discussion 
with  Isham? 

Mr.  Lilly.  Well,  Mr.  Isham  and  myself  on  a  num.ber  of  occasions, 
on  practically  any  political  contribution  that  was  made — he  would 
usually  talk  with  me  about  it.  Whether  I  would  approve  or  disapprove, 
he  wanted  to  make  me  aware  of  it  and  get  mv  thoughts  and  ideas  as  to 
what  I  really  thought  about  a  contribution  being  made. 

I  am  talking  about  TAPE  contributions  now.  So  we  had  a  rather 
close,  working  relationship.  Possibly,  he  valued  my  candidness  with 
him,  whether  he  agreed  or  disagreed  with  me  on  what  I  really  and 
truly  thought  about  making  a  political  contribution  to  a  candidate. 
I  think  we  had  a  close,  working  relationship,  and  this  is  why  I  think 
he  would  have  since  it  originally  involved  TAPE  funds. 

I  think  he  would  have  discussed  it  with  me. 

Mr.  Weitz.  On  that  point,  since  it  did  originally  involve  TAPE 
funds,  Wiis  there  any  discussion  between  you  and,  either  Mr.  Isham 
or  Mr.  Nelson  or  anyone  else  concerning  how  this  transaction  would 
be  reported  by  TAPE  ? 

Mr.  Lilly.  This  is  something  that  I  have  no  knowledge  of  at  all  as 
to  how  they  reported  it. 

Mr.  Weitz.  Are  you  familiar  with  the  Corrupt  Practices  Act  of  1925, 
which  was  then  applicable  ? 

Mr.  LnjLY.  At  that  particular  time,  no.  I  am  now,  but  at  that  par- 
ticular time,  I  was  not,  and  Mr.  Isham  was  making  the  reports.  I  was 
concerned  about  who  we  contributed  to,  which  was  not  as  detailed  as 
it  is — certainly  it  was  far  different. 

I  am  familiar  with  what  goes  into  the  report.  He  wanted  people 
identified  and  various  other  things,  State  and  Federal  people,  because 
he  did  not  have  this  information.  But  the  actual  report  itself,  Mr. 
Isham  prepared  it,  and  I  did  not  ha\'e  that  much  knowledge  of  it. 

Mr.  Weitz.  Was  it  ever  discussed  whether  or  not  it  would  be 
reported  at  all,  quite  apart  from 

Zvlr.  Lilly.  I  do  not  know.  To  my  knowledge,  it  was  not  reported 
with  me,  if  it  was  ever  to  be  reported  at  all. 


5918 

Mr.  Weitz.  Was  it  ever  explained  to  you  as  to  why  the  contributicHi 
was  made  in  cash  ? 

Mr.  Lilly.  No. 

Mr.  Weitz.  Did  you  ever  ask  ? 

Mr.  Lilly.  I  did  ask  why  we  could  not  go  with  TAPE,  and  why  we 
could  not  use  checks.  We  had  money  in  20  States,  $5,0()0  in  each,  or 
I  could  set  up  special  people  and  argued  a  considerable  length  of  time 
with  Mr.  Nelson  about  this. 

Mr.  Weitz.  Did  you  argue  with  him  before  August  1,  or  in  December 
before  the  loan  was  actually  taken  ? 

Mr.  Lilly.  This  was  in  December — before  the  loan  was  taken. 

Mr.  Weitz.  So  when  it  was  originally  proposed  to  you  in  July  you 
followed  through,  and  there  was  no  discussion  of  alternative  ways  of 
making  a  contribution? 

Mr.  Lilly.  Not  to  my  memory. 

Mr.  Wbitz.  And  at  that  time,  you  did  not  ask  why  it  had  to  be  made 
in  cash? 

Mr.  Lilly.  No. 

Mr.  Weitz.  Do  you  know  who  proposed  that  it  be  made  in  cash? 

Mr.  Lilly.  No;  I  do  not. 

Mr.  Weitz.  Mr.  Nelson  merely  came  to  you  with  the  decision  that  it 
Avas  to  be  made  in  this  fashion  ? 

Mr.  Lilly.  And  delivered  to  Mr.  Semer. 

Mr.  Nicholas.  On  the  cash  part  of  it.  Bob,  or  Mr.  Lilly,  let  me  ask 
you  this.  Did  anyone  make  any  decision  as  to  the  amount  of  bills  that 
it  would  be  made  in — you  say,  like  $100  bills? 

"WHiere  did  that  come  from  ? 

Mr.  Lilly.  When  I  called  Mr.  St«tler  at  the  bank 

Mr.  Nicholas.  If  you  know, 

Mr.  Lilly  [continuing].  He  told  me  it  would  be  in  $100  bills.  This 
was  my  first  knowledge  that  it  would  be  in  $100  bills. 

Mr.  Nicholas.  Mr.  Stetler  told  you  ? 

Mr.  Lilly^  Mr.  Stetler  at  the  bank. 

Mr.  Nicholas.  And  Mr.  Stetler,  as  I  understand  it,  was  president  of 
the  Citizens'  National  Bank  at  Austin,  Tex.,  at  that  time  ? 

Mr.  Lilly.  That  is  right. 

Mr.  Nicholas.  Do  you  know  of  your  own  knowledge  that  that  bank 
was  owned  or  controlled  by  Jake  Jacobsen  and  Joe  Long  ? 

Mr.  Lilly.  That  is  true. 

Mr,  Nicholas.  Were  they  the  majority  stockholders,  if  you  know  ? 

Mr.  Lilly.  They  were  major  stockholders. 

Mr.  Nicholas.  Was  Jake  Jacobsen,  at  that  time,  attorney  for  AMPI 
or  rather  MPI? 

Mr.  Lilly.  Yes;  he  was  an  attorney,  that  would  have  been  AMPI. 
And  he  was  on  a  retainer  for  being  an  attorney  for  AMPI. 

Mr.  Nicholas.  Was  there  any  discussion  at  that  time  as  to  the  type 
of  $100  bills  that  would  be  used  in  this  contribution,  gift  or  donation, 
or  whatever  it  turned  out  to  be  ? 

Mr.  Lilly.  Well,  Mr.  Stetler  told  me  that  it  would  take  several  days 
to  get  the  money  together.  He  would  attempt  to  get  older  bills,  and  he 
would  attempt  to  get  the  money  together  Ix^cause  if  he  too]<: — he  named 
n  tiiifiiie  in  dollars.  If  vou  take  so  nuuiv  dollar.s  out  of  a  bank,  the 


5919 

Federal  banking  authorities  are  going  to  start  looking  into  it,  as  to 
how  many  $100  bills  come  out  of  a  particular  bank  and  why. 

This  is  why  he  wanted  some  time  to  accumulate  it. 

Mr.  Nicholas.  You  were  not  talking  to  Jake  Jacobsen  at  this  time  ? 

Mr.  Lilly.  No;  I  talked  to  Mr.  Stetler. 

Mr.  Nicholas.  Mr.  Stetler — is  Mr.  Stetler  still  with  the  bank  ? 

Mr.  Lilly.  No  ;  he  is  not. 

Mr.  Nicholas.  Mr.  Stetler  then,  I  assume,  did  not  relate  to  you  as  to 
why  he  wanted  to  collect  the  $100  bills,  as  to  who — I  mean,  he  did 
not  relate  to  you  if  anyone  had  told  him  or  advised  him  to  do  it  in  this 
manner? 

Mr.  Lilly.  No ;  he  did  not. 

Mr.  Nicholas.  He  just  told  you  how  he  was  going  to  do  it  ? 

Mr.  Lilly.  True. 

Mr.  Nicholas.  Was  anything  said  about  serial  numbers  on  the  $100 
bills? 

In  other  words,  was  there  any  purpose  in  having  different  types  of 
$100  bills — old  money,  new  money,  money  from  different  banks,  and 
so  forth  ? 

Mr.  Lilly.  He  probably  meant  to  indicate  this  by  his  statement  to 
me,  but  when  he  said  he  had  to  collect  it  from  a  number  of  banks  over 
a  period  of  time  to  keep  from  attracting  attention,  I  would  have  to 
assume  that.  But  he  did  not  tell  me  as  much. 

Mr.  Weitz.  Let  me  ask  you  concerning  your  transaction  with  Semer. 
When  you  gave  the  money  to  him,  what  did  you  tell  him,  or  what  did 
he  tell  you  about  it  ? 

Mr.  Lilly.  Of  course,  we  had  had  a  prior  conversation,  and  he  was 
aware  of  my  delivery  of — truthfully,  I  do  not  know  if  I  mentioned  the 
$100,000  figure  to  him.  Possibly,  I  did. 

I  do  remember  asking  him  if  he  cared  to  count  it,  and  he  said,  "No." 
But  outside  of  that,  it  was  a  short  conversation;  truthfully,  it  just 
was  not  a,  very  long  conversation. 

Mr.  Weitz.  If  you  told  him  the  amount  of  contribution,  did  he  ex- 
press surprise  ? 

Mr.  Lilly.  No  ;  he  did  not. 

Mr.  Weitz.  Did  he  open  the  satchel  in  any  way  to  see  what  was 
there? 

Mr.  Lilly.  I  do  not  remember  him  even  opening  the  briefcase. 

Mr.  Weitz.  Did  he  give  you  a  receipt  ? 

Mr.  Lilly.  No. 

Mr.  Weitz.  Had  you  asked  for  one  ? 

Mr.  Lilly.  No;  I  knew  him  to  be  a  partner  of  Mr.  Jacobsen,  as  far 
as  law  partners  are  concerned,  in  Washington. 

Mr.  Weitz.  At  any  time,  either  before  or  after  delivery  to  Mr. 
Semer,  did  he  ask  you  about  the  reporting  requirements  in  connection 
with  the  transaction,  whether  TAPE  had.  been  given  names  of  com- 
mittees or  otherwise  provided  with  information  to  report  it  ? 

Mr.  Lilly.  I  think  he  did,  at  some  time,  ask  me  how  it  would  be  re- 
ported ;  if  it  would  be  reported  by  the  committee. 

Mr.  Weitz,  Would  it  have  been  in  the  conversation  in  which  he  said 
he  dropped  off  the  package  in  California? 

Mr.  Lilly.  It  could  well  hp.ve  been,  because  I  remember  him  asking 
how  we  reported  it. 


5920 

Mr.  Weitz.  So  he  did  ask  that  once.  What  did  you  tell  him  ? 

Mr.  Lilly.  I  do  not  know. 

Mr.  Weitz.  You  say  you  were  not  familiar  with  the  reporting 
requirements  of  the  1[^25  act  ? 

Mr.  Lilly.  [Nods affirmatively.] 

Mr.  Weitz.  Would  you  have  been  able  to  tell  him  an3^thiiig? 

Mr.  Lilly.  Well,  I  was  familiar  to  the  extent  that  you  mean  the 
times  or  the  days  of  the  year  that  it  was  reported.  I  was  aware  of  the 
fact  that  there  was  a  limitation  on  how  much  you  can  contribute. 

Mr.  Weitz.  How  much  was  that  limitation  ? 

Mr.  Lilly.  It  was  $5,000  to  any  one  candidate,  in  any  one  year. 

Mr.  Weitz.  In  fact,  in  December,  when  you  meant  to  talk  this  matter 
over  with  Mr.  Nelson,  you  yourself  suggested  that  they  could  break 
down  the  $100,000  to  20  different  committees  ? 

Mr.  Lilly.  That  is  right. 

Mr.  Weitz.  Now,  when  you  picked  the  money  up  from  Mr.  Stetler, 
was  Mr.  Jacobsen  thei-e  ? 

Mr.  Lilly.  He  could  possibly  have  been.  But  I  do  not  remember 
his  being  there. 

Mr.  Nicholas.  On  that  point,  let  me  ask  you  this. 

"VNHien  you  picked  up  the  money  from  Mr.  Stetler  at  Citizens'  Na- 
tional Bank,  did  you  say  that  Mr.  Stetler  insisted  on  counting  the 
money  ? 

Mr.  Lilly.  He  insisted  on  counting  the  money. 

Mr.  Nicholas.  Where  was  it  counted  ? 

Mr.  Lilly.  It  was  counted  in  Ins  office.  He  drew  the  curtains  in  his 
glass-caged  office,  and  he  counted  the  money  in  his  office. 

Mr.  Nicholas.  Do  you  recall  the  time  of  day  ? 

Mr.  Lilly.  No.  It  seems  for  some  reason,  I  have  nothing  to  verify 
this,  it  seems  it  was  near  closing  hours  of  the  bank. 

Mr.  Nicholas.  Do  you  recall  how  the  money  was  packaged?  Was 
it  in 

Mr.  Lilly.  In  wrappers,  $1,000  per  wrapper. 

Mr.  Nicholas.  $100  bills  in  $1,000  wrappers? 

Mr.  Lilly.  That  is  how  I  remembei-  it. 

Mr.  Nicholas.  How  long  did  you  remain  in  ^Ir.  Stetler's  office 
counting  the  money  with  him  ? 

Mr.  Lilly.  I  do  not  remember  this.  I  know  that  we  counted  each 
package. 

Mr.  Nicholas.  Did  Mr.  vStetler  have  any  comment  to  make  about 
the  money  at  that  time  ? 

Mr.  Lilly.  No,  he  had  none. 

Mr.  Nicholas.  What  was  the  money  actually  in?  "N^Hiat  was  it  con- 
tained in? 

Mr.  Lilly.  Oh,  in  a  briefcase.  It  was  put  into  a  briefcase. 

Mr.  Nicholas.  Do  you  remember  the  color  of  the  briefcase  ? 

Mr.  I^iLLY.  No,  I  do  not  remember  tlie  color.  It  was  not  my  briefcase. 
They  had  provided  a  briefcase  at  the  bank. 

Mr.  'Weitz.  When  you  delivered  the  money  to  Semer,  you  left  the 
briefcase  with  him  ? 

Mr.  Lilly.  I  left  the  briefcase  with  him. 

Mr.  Weitz.  Let  me  mark  exhibit  No.  1,  and  show  it  to  you. 

[Whereupon,  the  document  referred  to  was  marked  as  Lilly  exhibit 
No.  1  for  identification.*] 

•  See  p.  5990. 


5921 

Mr.  Weitz.  Tliis  is  a  copy  of  a  debit  memo  from  Citizens'  National 

Bank,  dated  Au.a;ust  1,  1969.,  in  the  amount  of  $100,000,  and  it  reads, 

"Receipt  of  $100,000  cash  acknov/Iedged  this  1st  day  of'  August  1969, 

per  instructions  of  Bob  Tsham  by"  and  there  is  a  signature  which 

I   appears  to  be  "Bob  A.  Lilly.-' 

Have  you  ever  seen  that  ? 

Mr.  Lilly.  Yes,  I  have. 

Mr.  Weitz.  Is  that  a  copy  of  the  debit  memo  which  you  signed 
that  day?  '  "^  " 

Mr.  Lilly.  Yes,  that  is,  and  that  is  my  signature. 

Mr.  Weitz.  Now,  I  would  like  to  turn  back  again  to  the  events  in 
December  of  1969,  around  the  time  when  the  loan  was  taken  out,  and 
the  funds  transferred.  Before  the  17th,  can  you  recall  how  you  first 
learned  that  this  transaction  was  contemplated  ^ 

Mr.  Lilly.  The  transaction  of  the 

Mr.  NiCHOLuVS.  Do  you  mean  the  transaction  of  the  loan  ? 
I      Mr.  Weitz.  That  is  right,  the  December  1969  transaction. 
f    _  Mr.  Lilly.-  No.  I  really  cannot.  I  know  that  I  had  some  conversa- 
tion with  Mr.  Nelson  about  it ;  the  problems  about  the  $5,000  limita- 
tion. But  I  really  do  not  have  a  great  deal— I  cannot  remember  a  great 
deal  about  it. 

Mr.  Weitz.  Do  you  remember  speaking  to  Bob  Isham  specifically 
about  the  way  in  which  you  would  be  repaid  for  the  loan  ? 

Mr.  Lilly.  Yes.  We  had  a  discussion  at  that  time  as  to  how  it  would 
be  repaid.  Mr.  Isham,  at  that  time,  had  moved  to  San  Antonio.  His 
office  was  located  there,  and  he  did  draft  a  proposal  as  to  how  the 
money  would  be  repaid. 

^  The  note  would  be  made  for  60  days,  the  latter  part  of  December, 
the  year  of  1969,  a  portion  of  the  money  would  be  recovered  through 
a  series  of  attornej^s;  and  then  in  1970,  another  series  of  money  would 
be  recovered  m  attorneys,  and  reduced  to  writing,  some  names  of  attor- 
neys. Some  of  them  would  be  contacted  by  DeVier  Pierson.  He  was  to 
contact  some  of  them,  or  I  was  to  contact  some  of  them  to  see  if  they 
would. 

In  addition  to  that,  he  also  suggested  that  myself  and  three  other 
employees  would  be  given  bonuses— not  bonuses,  salary  advances,  or 
bonuses  or  expense  advances— of  $5,000  each  to  make  up  for  $20,000  of 
It.  And  then,  Mr.  Isham  had,  I  believe,  it  was  eight  attorneys  that  we 
would— he  wrote  down  the  figure  $10,000:  that  means  if  we  got  $5,000, 
he  would  be  paying  him  back  $10,000  to  cover  the  tax  situation. 

Mr.  Weitz.  And  if  it  was  $10,000,  you  would  be  repaying  them 
$20,000?  f  J     s 

Mr.  Lilly.  Right,  it  would  be  double. 

Mr.  Weitz.  Let  me  show  you  what  I  will  mark  as  exhibit  2,  which  is 
the  xeroxed  copy  of  wliat  appears  to  be  some  writino-  on,  perhaps, 
|a  yellow  pad,  some  legal-sized  paper. 

[Whereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No.  2  for  identification,*] 

^    Mr.  Weitz.  Could  you  identify  this  as  to  what  it  is,  and  whether  you 
have  seen  it  before  ? 

Mr.  Lilly.  Yes.  It  was  on  yellow  paper.  It  is  Mr.  Isham 's  writing; 
insofar  as  tlie  attorney's  names,  the  amount  of  money,  the  asterisks 

*  See  p.  5991. 


5922 

as  to  who  to  contact,  what  Lawyer,  DeVier  Pierson's  Washington 
telephone  number  are  all  his  writing. 

There  are  some  other  notes  around  the  edges  of  it. 
Mr.  XicHOLAS.  Whose  writing  ?  DeVier  Pierson's  ? 
Mr.  Lilly.  Robert  Isliams  writing.  And  the  other  writing  around 
the  edge  of  it  is  my  writing,  and  it  indicates  that  I  contacted  Joe 
Long  and  Frank  Masters,  because  1  see  my  OK,  and  this  is  my  writmg, 
and  checkmark  that  appears  to  be  made  by  me,  that  I  did  contact  them 
regarding  this. 

Mr.  Weitz.  And  as  to  the  others,  which  do  not  have  any  of  your 
markings  next  to  them,  they  wolild  have  been  contacted  either  by  Mr. 
Pierson  or  someone  else  ? 
Mr.  Lilly.  Or  by  Bob  Isham,  I  presume. 

Mr.  Weitz.  Do  you  recall  when  this  document  was  drawn  up,  or 
when  you  first  saw  it  ? 

Mr.  Lilly.  It  was  drawn  up  at  the  time,  right  at  the  time,  the  note 
was  drawn  up  in  December.  I  mean,  this  was  how  the  money  would  be 
paid  back ;  a  personal  note  would  be  made,  and  this  is  how  it  would 
be  recovered  and  paid  back  within  the  60-day  period. 

Mr.  Weitz.  "^Miy  are  there  two  columns  next  to  the  list  of  persons; 
one  marked  1969  with  a  series — $10,000  and  a  series  of  checks  under- 
neath it,  and  under  1970.  another  $10,000  written  with  a  series  of 
checks  marked  beneath  them  ? 

Mr.  Lilly.  On  this,  of  coui-se,  this  would  be^ — we  would  divide  it 
in  years  for  one  thing  as  far  as  reporting  ^vith  attorneys  and  ^'larious 
other  people,  and  they  would  recover  a  portion  of  it  this  year.  They 
would  recover  a  portion  of  it  in  the  next  calendar  year  of  1970;  of 
coui-se,  which  totals  $80,000. 

And  this  would  repay  half  of  it  [indicating]  or  approximately  half 
of  it;  and  this  column  [indicating]  in  1970  would  repay  approximately 
one-half  of  it.  as  four  people — Lilly,  Parr,  Anderson,  Suttle  with 
$5,000  each.  That  would  be  $20,000. 

I  suppose  it  says  "expense  advance."'  To  recover  $100.000 ;  I  mean 
this  was  his  determination  of  how  the  $100,000  would  be  paid  back. 
There  is  nothing  figured  in  there  for  interest  on  the  money.  It  is  just 
a  total,  $40,000  in  1969,  $40,000  in  1970,  that  would  be  $80,000  and  then 
$20,000  here  would  be  $100,000,  that  had  to  be  paid  back. 

Mr.  Weitz,  T^^lat  vou  are  saying  is  since  the  figures  were  all  doubled, 
it  is  actuallv  $80,000  in  1969,  $80,000  in  1970  plus  the  $20,000  expense 
advance  and  that  the  company,  it  would  be  envisioned,  would  have  to 
pa-y  to  these  individuals  through  billings;  approximately  $180,000  for 
the  original  $100,000  loan  ? 
Mr.  Lilly.  That's  right. 

Mr.  Weitz.  Was  it  clearly  understood  in  your  conversation  with 
Mr.  Isham  that  these  attornevs  would  be  making  payments  to  vou,  and 
would  in  turn  recoup  throu<rh  excess  billings  to  the  company? 

Mr.  Lilly.  That  is  right.  It  would  be.  and  further  for  the  most  part, 
it  was  discussed  that  thev  should  be  in  cash. 

Mr.  Weitz.  I  see  a  note  in  here  Avhere  it  savs,  "check  or  cash  to  Bob 
Liilv.'' 

Mr.  Limy.  Riffht. 

Mv.  Wk.itz.  Whose  writing  is  thai  ? 


5923 

Mr.  Lilly.  That  is  my  writing, 

Mr.  AVeitz.  So  you  say  it  could  be  either  in  check  or  cash,  but  that 
J   you  decided  that  it  woukl  be  preferable  if  it  were  in  cash? 
*       ]Mr.  Lilly.  Preferable  in  cash,  yes. 

Mr.  Weitz.  Did  you  talk  to  DeVier  Piereon  about  this  directly? 

Mr.  Lilly.  I  do  not  remember  at  the  time.  I  have  talked  to  De- 
\'ier  numerous  times,  but  I  do  not  remember  talking  to  him 

Mr.  Weitz.  Was  this  document  prepared  and  did  your  conversa- 
tion with  Mr.  Tsham  take  place  before  the  loan  was  actually  taken 
out  ? 

Mr.  Lilly.  To  my  memory,  yes.  it  was. 

Mr.  Weitz.  We  will  get  back  to  that  arrangement  in  a  minute.  I 

would   first  like  you  to  identify  certain  documents.  Let  me  mark 

document  No.  3,  whicli  is-— appears  to  be— a  Xeroxed  copy  of  a  note 

.    and  several  renewals ;  the  first  note  in  the  amount  of  $100,000  is  dated 

-    December  17,  1969,  and  it  is  signed  ''Bob  A.  Lilly." 

[Whereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No.  ?>  for  identification.*] 

Mr.  Weitz,  And  there  is  typed  on  it,  "Cei-tifieate  of  Deposit  No. 
188." 

Is  that  the  loan  and  subsequent  renewal  notes  represented  for  that 
oiiginal  $100,000  loan ? 

Mr.  Lilly.  It  is.  That  is  for  the  $100,000  loan. 

iNIr,  Xk'holas.  Before  you  get  into  the  note,  there  is  one  thing  that 
I  would  like  to  get  on  the  record,  that  I  am  confused  about.  In  your 

.i^stions  to  iMr.  Lilly  about  the  $10,000  beside  each  attorney's  name, 

uich  totals  $80,000  "in  1969,  and  the  $10,000  by  each  of  their  names, 
■iuit  totals  $80,000  in  1970;  the  question  that  bothers  me  is  this  that 
I  want  cleared  up.  , 

Was  tlie  amount  of  $80,000  theoretically  to  be  billed  by  the  attor- 

vs  to  AMPI,  or  was  it  MPI  at  that  time  f 

Ml-.  Lilly.  It  was  AMPI. 

Mr.  Nicholas.  The  $80,000,  was  only  $10,000  of  that  supposed  to 
go  to  payment  ? 

Mr.  Lilly.  That  is  true.  This  [indicating]  was  the  figure,  the 
amount  of  money  that  it  would  actually  co.st  AMPI. 

Mr.  Nicholas.  In  order  to  be  clear,  look,  for  instance,  if  Stuart 
.  Russell  billed  AMPI  $10,000  at  this  particular  time  in  1969,  then 
1=^  AMPI  would  then  send  Stuart  Russell  $10,000.  Is  that  correct  ? 

Mr,  Lilly,  That's  right, 

Mr.  Nicholas.  As  an  example? 
II    Mr.  Lilly.  Right. 

T     Mr.  Nicholas.  Then  Stuart  Russell  would  then  give  you  back,  if 
you  were  the  party  involved,  the  $5,000  to  apply  to  the  note? 

]\Ir.  Ltlly.  That  is  right. 

Mr.  Xtciiolas.  Not  $10,000? 

Mr.  Lilly.  That  is  right.  It  didn't  work  tluit  way  in  every  instance, 
but  that  is  what  tliis  was  designed 

JSIr.  Nicholas.  Tliat  was  the  theory? 

Mr.  Lilly.  That  was  the  theory. 

^Ii'.  Weitz.  Let  me  interi-upt  for  a  minute.  Now.  on  the  same  piece 
of  paper,  erhibit  2,  there  is  an  asterisk  to  the  figure  of  $100,000  under 

*  See  p.  5392. 


5924 

the  1969  column  and  the  asterisk  footnote  reads,  "To  be  deposited 
before  12-31-69  in  TAPE." 

Let  me  ask  you  a  few  questions  about  that.  First  of  all,  do  you  re- 
call whether,  in  fact,  it  was  originally  contemplated  the  money  would 
be  repaid  directly  to  TAPE  without  the  necessity  of  you  making  a 
$100,000  loan? 

Mr.  Lilly.  Not  to  my  knowledge,  and  I  think  the  asterisk — when  he 
talks  about  the  $100,000,  he  is  referring  to  the  $100,000  note  to  be  de- 
posited; so  that  it  would  be  clear,  and  TAPE  would  show  that  no 
money  had  been  taken  out  of  it. 

Mr.  Weitz.  So  you  are  saying  that  at  the  time  this  was  drawn  up, 
the  note  to  make  TAPE  whole  before  the  end  of  the  year  was  already 
contemplated  ? 

Mr.  Lilly.  That  is  true. 

Mr.  Weitz.  And  this  procedure,  since  it  says  "check  or  cash  to  Bob 
Lilly"  at  the  top,  was  clearly  to  repay  you  after  TAPE  was  whole? 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  Was  it  contemplated  that  the  $100,000  would  be  repaid 
to  you  all  in  1969,  and  then  the  excess  taxes  billed  to  these  attorneys 
in  1970;  or  were  they,  in  fact,  only  to  give  you  $50,000  in  1969,  and 
$50,000  in  1970? 

Mr.  Lilly.  The  note  was  60  days,  and  if  my  memory  serves  me  right, 
and  as  I  remembered  it,  tlie  moneys  would  actuail)'  be  paid  back  in  the 
2-year  time  within  the  60-day  framework. 

Mr.  Weitz.  Would  that  also,  for  example,  enable  the  attorneys  to 
spread  their  tax  burden  over  a  2-year  period  ? 

Mr.  Lilly.  That  is  true. 

Mr.  Weitz.  But  it  was  contemplated,  nonetheless,  that  they  would 
complete  the  transaction  by,  for  example,  February  17 — February  15, 
maybe,  in  1970? 

Mr.  Lilly.  That's  right. 

Mr,  Nicholas.  Now,  on  that  point,  when  this  list  was  made  up, 
whenever  it  was  made  up,  were  any  of  these  attorneys  listed  on  this 
list,  that  is  exhibit  No.  2  ?  Were  they  a  party  to  this  ? 

By  that,  I  mean  were  they  there  ? 

Mr.  Lilly.  None  of  them  were  present. 

Mr.  Nicholas.  Had  they  been  consulted  ? 

Mr.  Lilly.  I  do  not  know  that. 

Mr.  Nicholas.  Do  you  mean  that  you  and  Mr. — did  Mr.  Isham 
just  write  down  the  names  ? 

Mr.  Lilly.  No.  When  I  met  with  Mr.  Isham,  he  had  the  names.  Ap- 
parently, he  had  had  a  conversation  with  Mr.  Nelson  or  with  someone,  I 
am  not  sure  who,  and  then  he  had  these  names.  He  drafted  them  down, 
and  asked  me  about  the  Gary  Evat,  E-v-a-t,  question  mark.  He  was 
a  young  attorney  with  Jacobsen  and  I>ong. 

And  I  said  no,  that  you  could  not  include  him  or  you  should  not  in- 
clude him.  So  he  was  not  a  part  of  this.  He  then  discussed  the  entire 
operation.  None  of  the  attorneys  were  present. 

He  said — maybe  he  told  me  how  to  talk  to  DeVier  or  he  would  talk 
to  DeVier  Pierson,  and  DeVier  was  to — it  was  clearly  my  understand- 
ing that  DeVier  was  to  contact  them,  and  so  far  as  T  know,  he  did  con- 
tact those  marked  with  a  "I". 


5925 

Mr.  Nicholas.  In  order  to  bring  this  into  the  proper  focus,  in  con- 
text, earlier  in  your  testimony,  you  testified,  I  believe,  that  attorneys 
had  put  input  into  the  organization  and  how  to  make  contributions 
and  so  forth.  You  mentioned  DeVier  Pierson,  Joe  Long,  Stuart  Rus- 
sell, Jim  Jones,  Dick  Maguire,  et  cetera. 

Mr.  Lilly.  That's  true. 

Mr.  Weitz.  I  think  the  record  will  show  he  only  mentioned  three 
individuals ;  Ted  Van  Dyk,  DeVier  Pierson  and  Jake  Jacobsen. 

Mr.  Nicholas.  My  question  is,  "Whosever  name  the  record  does 
reflect  on  this,  would  this  have  been  part  of  the  advice  given  by  those 
attorneys  at  a  time  prior  to  the  time  their  names  were  listed  on  exhibit 
No.  2? 

Mr.  Lilly.  No,  their  input  at  the  time  that  I  mentioned  the  attor- 
neys' names  was  when  we  were  trying  to  establish,  create  what  later 
became  known  as  TAPE,  the  veliicle  for  TAPE. 

Mr.  Nicholas.  So  then  at  this  particular  time,  your  memory  is  that 
you  do  not  really  know  whether  or  not  any  of  these  attorneys  were 
actually  contacted  by  anybody,  anyone  in  the  organization  ? 

Mr.  Lilly.  No. 

Mr.  Nicholas.  You  did  not  contact  them  ? 

Mr,  Lilly.  Evidently,  I  contacted  two  attorneys.  I  have  an  "OK" 
and  an  "OK"  by  Joe  Long  and  Frank  Masters,  and  that  is  my  writing. 
And  to  me,  this  indicates  that  I  must  have. 

Mr.  Nicholas.  But  this  writing  of  yours  would  have  been  put  on 
exhibit  No.  2  after  exhibit  No.  2  was  originally  created  by  Mr.  Isham  ? 

Mr.  Lilly.  It  could  have  been  that  all  of  these  notes  were  put  on 
after.  They  could  have  been  put  on  at  that  time. 

Mr.  Nicholas.  Your  handwriting  was  put  on  at  a  subsequent  time ; 
is  that  correct  ? 

Mr.  Lilly.  This  may  have  been  a  time  when  I  might  have  collected 
some  money  from  them.  I  do  not  know. 

Mr.  Nicholas.  All  right. 

Now,  for  instance,  and  to  keep  it  in  proper  context,  with  the  exhibit 
2,  take  for  instance  Frank  Masters,  did  you  ever  talk  to  Frank  Mastei-s 
about  this  plan  ? 

]Mr.  Lilly.  No.  I  talked  to  Frank  Masters,  and  told  him  that  I 
needed  money,  and  he  was  aware  of  it.  He  did  deliver  me  some 
money. 

Mr.  Weitz.  I  think  that  we  will  get  into,  over  a  period  of  time,  each 
individual  person  on  this  list,  and  the  transactions  that  transpired. 

Before  we  leave  the  exhibit,  though,  in  the  upper  left-hand  corner  is 
scribbled — it  seems  to  be  "February,  March  15  to  26,  April,  May,  July, 
September  4  to  9;  and  October."  Do  you  know  what  that  means? 

Mr.  Lilly,  No,  I  do  not. 

Mr.  Weitz.  Is  that  your  handwriting  ? 

Mr.  IjIlly.  It  is  my  handwriting,  yes. 

Mr.  Weitz.  Would  that  have  been  written  on  there  at  a  different 
time  than  the  other  handwriting  of  yours  on  this  document? 

Mr.  Lilly.  To  me,  yes,  because  of  the  different  weight  pen  that 
might  have  been  used  at  the  time.  I  do  not  rem^ember.  It  has  no 
significance  to  me. 

Mr.  Weitz.  I  would  like  to  mark  for  exhibit  4.  a  security  agreement 
dated  December  17,  1969,  and  the  debtor's  name  is  Bob  A.  Lilly  in  the 


5926 

amount  of  $100,000,  and  it  pledges  a  Citizens'  National  Bank  certificate 
of  deposit,  No,  188  in  the  amount  of  $100,000  in  the  name  of  Milk 
Producers.  Inc.  And  it  is  signed  "Milk  Producers,  Inc.  by  Bob  A. 
Lilly." 

[Whereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No,  4  for  identification.^] 

Mr.  Weitz.  Have  you  seen  this  document,  and  is  that  your  signa- 
ture? 

Mr,  Lilly.  Yes,  I  have  seen  the  document,  and  that  is  my  signature. 
It  is  rather  hard  for  me  to  read.  It  is  light,  but  it  is. 

Mr.  Weitz.  Do  you  remember  signing  this  document? 

Mr,  Lilly,  Yes. 

Mr.  Weitz.  Did  you  have  the  authority  to  pledge  funds  of  MPI  ? 

Mr.  Lilly.  No,  I  did  not  have. 

Mr.  Weitz.  Did  you  know  that  at  the  time  you  signed  this  docu- 
ment ? 

Mr,  Lilly.  Yes. 

Mr.  Weitz.  Did  anyone  explain  to  you  what  the  purpose  of  this 
document  or  pledge  was? 

Mr.  Lilly,  No, 

Mr.  Weitz.  To  the  best  of  your  knowledge,  tlie  transaction  was  to 
be  secured,  if  it  had  to  be  secured,  by  a  certificate  of  deposit  of  TAPE  ? 

Mr.  Lilly.  True. 

Mr.  Weitz.  Were  you  aware  that  MPI  had  previously  on  or  about 
this  time  purchased  such  a  CD  in  the  amount  of  $100,000? 

Mr.  Lilly.  Yes.  I  do  not  know  whether  they  had  purchased  it  at 
this  time,  but  I  knew  they  were  contemplating  TAPE  to  purchase  a 

Mr.  Weitz.  But  whether  MPI  had  such  a  CD  ? 

Mr.  Lilly.  No.  I  am  totally  unaware  of  that. 

Mr.  Weitz.  Do  you  remember  what  document  you  thought  you  were 
signing  when  you  signed  this  ? 

Mr.  Lilly,  A  portion  of  the — well,  security  agreement  pledging 
$100,000  CD  that  I  thought  TAPE  would  purchase  as  collateral  for 
the  loan  that  I  had  taken  out. 

Mr.  Weitz.  Let's  go  back  then.  I  am  going  to  mark  as  exhibit  No. 
5  a  security  agreement  by  TAPE  for  the  benefit  of  Bob  A,  Lilly, 
dated  December  17,  1969,  in  the  amount  of  $100,000,  and  the  collateral 
is  stated  as  ope  Citizens"  National  Bank  certificate  of  deposit.  No, 
CD  219  for  $100,000  issued  to  TAPE,  And  it  is  signed  "TAPE  by 
Bob  Isham,  trustee," 

[Whereupon,  the  document  referred  to  Avas  marked  Lilly  exhibit 
No,  5  for  identification.^] 

Mr.  Weitz.  Have  you  ever  seen  that  document  ? 

Mr.  Ln.LY.  Yes,  I  liave  seen  it. 

Mr,  Weitz.  To  the  best  of  your  knowledge,  is  that  Mr,  Isham's 
signature? 

Mr,  Lilly.  Yes,  it  is. 

Mr,  Weitz.  Do  you  know  whether  this  document  was  executed  on 
the  I7th  or  shortly  thereafter? 

Mr.  Lilly.  To  my  knowledge,  it  was  executed  on  the  I7th,  but  it  may 
have  been  shortly  after. 

1  See  p.  ,59S5. 
=•  See  p.  5997. 


5927 

Mr.  Wettz.  But  it  was  your  understanding  that  such  a  pledge  was  to 
be  made  in  order  to  secure  the  loan  to  jou '^ 

Mr.  Liij.Y.  True. 

Mr.  Wettz.  And  that  you  Avere  to  be  repaid  directly  and  tlie  money 
was  not  to  be  repaid  from  the  attorneys  to  TAPE,  but  rather  to  you, 
and  the  loan  was  to  make  TAPE  whole  on  the  JTth  or  shortly 
thereafter  ? 

Mr.  LiEEY.  That  is  right. 

Mr.  Nicholas.  Mr.  Weitz,  I  would  like  to  ask  Mr.  Lilly  a  question 
on  those  two  documents,  the  two  CD's. 

Is  exhibit  No.  4  the  MPI-purchased  CD? 

Mr.  Weitz.  Yes. 

Mr.  Nicholas.  Is  that  an  interest-bearing  CD? 

Mr.  Lilly.  Are  vou  asking  me? 

Mr.  Nicholas.  No.  I  am  asking 

Mr.  Weitz.  The  pledge  does  not  indicate — the  security  agreement 
does  not  indicate  whether  it  is  interest-bearing. 

Mr.  Nicholas.  Oh. 

]Nfr.  Weitz.  However,  we  do  ha\e  a  letter.  Let's  go  off  the  record  for 
a  minute. 

[Discussion  off  the  record.] 

]Mr.  Weitz.  Back  on  the  record. 

Mr.  NicTTOLAS.  In  reference.  Mr.  Lilly,  to  exhibit  No.  4,  which  is  the 
$100,000  CD,  which  was  apparently  as  I  understand  purchased  bv 
MPT,  dated  December  17,  1969.  and  exhibit  No.  5,  which  is  TAPE  for- 
the-benefit-of-Bob-Lilly  CD  for  $100,000  bearing  the  same  date,  De- 
cember IT,  1969 :  do  you  understand  ? 

[Mr.  Lilly  nods  affirmatively.] 

Mr.  Nicholas.  Do  vou  have  any  personal  knowledge  of  yoiu"  own  in 
keeping  with  anv  conversations,  if  you  had  any,  with  Bob  Isham  or 
anybody  else  as  to  whv  two  CD's  for  the  purposes  of  the  security  or 
collateral  of  your  original  note  for  $100,000,  dated  December  17.  1969? 

Mr.  Lilly.  I  had  a  conversation  with  Mr.  Isham  at  some  time — early 
1970,  possibly  in  late  1969 — we  discussed  the  fact  that  thei-o  was  an 
interest-bearing  CD,  and  it  was  the  intention  to  haA'e  a  non-iiiterest- 
bearing  CD,  but  I  do  not  know  which. 

Mr.  Nicholas.  In  other  words,  you  have  nothing  to  do  with  the 
paperwork  involved  in  this? 

Mr.  Lilly.  Nothing. 

Mr.  Nicholas.  In  order  for  the  record  to  be  clear,  what  were  your 
specific  instructions  as  to  how  to  borrow  the  $100,000,  who  you  were  to 
borrow  it  from,  and  what  you  Avere  to  secure  it  with  ? 

Mr.  Lilly.  I  was  instructed  by  Mr.  Nelson  that  the  monev  uould  be 
borroAved  from  Citizens'  National  Bank,  that  collateral  would  be  put 
up,  and  that  I  AA-ould  sign  the  note  personallv.  I  Avould  recoAcr  from 
attorneys,  and  I  aa^ouVI  go  to  the  Citizens'  National  Bank  in  Austin 
to  execute  it. 

And  this  is.  in  effect,  what  I  did. 

Mr.  Nicholas.  And  pursuant  to  those  instructions  from  Mr.  Harold 
Nelson,  did  you,  in  fact,  go  to  the  Citizens'  National  Bank,  and  borroAv 
the  $100,000  ? 

^Fr.  Lilly.  I  did, 

Mr.  NiCTK^LAS.  Thafs  all  I  have  on  that  point  at  this  time. 


5928 

Mr.  Weitz.  Off  the  record. 

[Discussion  off'  the  record.] 

Mr.  "Weitz.  Back  on  the  record. 

Mr.  Nicholas.  Now,  Mr.  Lilly,  on  this  point  of  the  dates  whoii  you 
delivered,  and  before  we  get  too  far  afield  from  the  date  you  actually 
delivered  $100,000  to  Mr.  Semer  at  the  Executive  Inn  in  Dallas,  which 
has  been  established  as  August,  that  is  on  August  1,  1969;  had  you, 
prior  to  this  time,  indicated  by  statement  to  either  Mr.  Weitz  or  to  Mr. 
Jon  A.  Sale  or  to  the  Watergate  grand  jury  a  different  date  other  than 
the  date  which  you  have  related  here  today  ? 

Mr.  Lilly.  Yes. 

Mr.  Nicholas.  I  want  you  to  explain  why  there  was  the  confusion 
in  the  dates. 

Mr.  Lilly.  Let  me,  if  I  may,  read  a  statement  that  I  had  regarding 
that. 

"At  m}'^  previous  appearance  before  this  grand  jury" — this  was 
drafted — I  have  appeared  before  the  Federal  grand  jury  here  in  Wash- 
ington. On  what  date,  I  cannot  recall. 

Mr.  Nicholas.  That  would  be  on  a  Friday  in  the  latter  part  of 
October.  I  do  not  remember  the  date  right  now. 

Mr.  Lilly.  And  I  made  a  statement  at  that  time,  that  it  was  Decem- 
ber 1,  and  here  is  where  I  would  like  to  enter  here 

Mr.  Nicholas.  Not  December  1 ;  December  19  or  29. 

Mr.  Lilly.  29th,  I'm  sorry. 

At  my  previous  appearance  before  the  grand  jury,  I  testified  that  on  Decem- 
ber 29th.  1969,  I  picked  up  $100,000  in  $100  bills  at  the  Citizens'  National  Bank, 
Austin,  Tex.,  and  delivered  it  to  Milton  Semer,  a  Washington,  D.C.,  attorney  at 
the  Executive  Inn  in  Dallas,  Tex. 

After  reviewing  my  diary  for  1969,  I  find  I  was  in  error  on  the  date.  My  diary 
shows  that  I  traveled  from  San  Antonio  to  Dallas  on  December  29,  1969.  but 
no  stop  in  Austin,  where  Citizens'  National  Bank  is  located.  So  I  could  not  have 
picked  up  the  $100,000  on  that  day. 

With  the  aid  of  my  diary  and  various  bank  records.  I  reconstructed  to  the  best 
of  my  ability  the  correct  sequence  of  events.  August  1.  1969.  is  the  date  I  picked 
up  the  $100,000  in  Austin  and  delivered  it  to  Mr.  Semer  in  Dallas. 

My  diary  shows  on  August  1,  1969,  I  traveled  from  San  Antonio  to  Austin  to 
Dallas,  and  on  to  Memphis  and  Humbolt,  Tenn.,  and  then  back  to  San  Antonio. 
I  have  seen  a  debit  receipt  to  the  TAPE  trust — Agricultural  Political  Education — 
account  signed  bv  me  in  acknowledgment  of  receipt  of  the  $100,000  dated  August 
1.  1969. 

This  same  receipt  has  a  Citizens'  Bank  stamp  dated  August  1,  1969  on  the  face 
of  the  receipt.  Also,  the  August  29,  1969  statement  of  account  for  TAPE,  covering 
the  period  July  31,  1969  through  August  29,  1969,  shows  a  debit  of  $100,000  to 
this  account  on  August  1,  1969. 

Mr.  Nicholas.  Now%  at  this  time,  for  the  record,  do  you  wish  to  cor- 
rect your  prior  statement  as  to  the  date  of  delivery  of  the  $100,000? 
Mr.  Lilly.  I  do. 

Mr.  Nicholas.  That  is  it  was  on  August  1. 1969? 
Mr.  Lilly.  And  not  December  29, 1969. 
Mr.  Nicholas.  And  not  December  29, 1969  ? 
Mr.  T>iLLY.  True. 
Mr.  NiCHOL.vs.  OK. 
That  is  all  I  have. 
Mr.  Weitz.  OK.  Off  the  record. 
[Discussion  off  the  record.] 
Mr.  Weitz.  Rack  on  the  record. 


5929 

Mr.  Sanders.  You  have  mentioned  a  diary.  Has  this  diary  been 
shown  to  or  made  avnilable  to  our  staff? 

Mr.  Lilly.  Mr.  Sanders — this  morning',  I  believe  it  was  delivered 
this  mornin<; — and  it  has  been  Xerox  copied,  and  yon  have  the  year  of 
1069,  and  possibly  with  4  or  5  pages  gone  out  of  the  very  front  portion 
of  it,  as  T  remember.  But  you  have  a  Xeroxed  copy  of  that  diary  I  re- 
ferred to, 

Mr.  Sandeks.  What  vear  does  it  cover  there  ? 

Mr.  Lilly.  1969. 1970, 1971, 1972—4  years. 

Mr.  Sanders.  And  you  have  possession  of  the  original  ? 

Mr.  Lilly.  Yes.  I  do  have, 

Mr.  Sanders.  Prior  to  the  time  of  your  delivery  of  $100,000  to  Mr. 
Samer.  did  you  learn  of  any  circumstances  whatsoever  which  indi- 
cated to  you  that  this  contribution  was  solicited  by  any  persons  in  the 
Republican  committee  or  the  Republican  cam.paign? 

Mr.  Lilly.  I  liave  no  knowledge  of  anyone  in  the  Republican  Party 
or  the  campaign  having  solicited.  I  recall  no  conversation  with  Mr, 
Nelson,  or  Mr.  Isham,  or  Mr.  Jacobsen,  or  Mr.  PaiT  about  any 
solicitation. 

Mr.  Sanders.  My  (|uestion  relates  to — as  you  may  have  gathered — • 
to  the  actual  way  in  which  this  thing  was  initiated.  It  appears  to  me 
from  what  you  said  that  it  had  its  genesis  with  officials  witliin  AMPI, 
as  opposed  to  someone,  some  Republican  official  contacting  AMPI  for 
a  contribution  ? 

Mr.  Lilly.  Somewhere  in  the  conversation  in  contributing  to  Repub- 
licnns,  because  we  had  been  heavily  involved  with  the  Democrats,  really 
was  what  I  was  intcuding  to  imply  by  my  statement.  I  am  not  sure 
Avhat  T  might  have  said  in  my  statement. 

This  was  my  implicatio]i  that  someone  within  the  Republican 
Party — it  would  not  be  at  too  low  a  le^el.  it  would  certainly  not  be 
a  State  level ;  it  would  have  to  be  higher  than  that — had  to  have  con- 
tacted ]Mr.  Xelson,  and  to  have  generated  his  approval,  his  final  action 
through  me  on  this  thing. 

Mr.  Sanders.  Before  the  time  of  your  delivery  to  Semer.  did  you 
ever  leai  ii  from  Xelson  or  Parr  who,  in  the  Republican  Party,  might 
have  contacted  AMPI  ? 

Mr.  Lilly.  Xo,  I  do  not  know  to  this  day. 

]Mr.  S.VNDERS.  But  you  think  the  rationale  for  wanting  to  make  a 
contribution  to  the  partv — to  the  Republican  Partv — was  the  heavy 
imolvemont  of  A^NIPT  on  behalf  of  Democrats  in  1968? 

^Ir.  TjIlly.  This  was  their  rationale,  and  it  is  a  rationale  to  me,  I 
mean,  I  can  rationalize  it  in  this  manner. 

]\rr.  Sanders.  Were  you  personally  involved  in  making  contiibutions 
to  Democratic  officials  in  1968  ? 

Mr.  Lilly.  Yes.  T  made  personal  contributions  by  personal  checks 
in  1968.  I  was  reimbursed  at  that  tiiric  by  ^VIPI  into  my  personal  ac- 
count in  1968;  nionevs.  total  monevs,  some — I  can  know  of  records  of 
$30,000,  of  personal  cliecks  of  over'>^20.000,  jiossibly  as  much  as  $40,000 
that  went  through  iny  own  personal  account,  was  expended  by  me  on 
behalf  of  Democrats  in  1968. 

Mr.  Sanders.  Did  it  appear  to  you  that  the  funds,  which  were  ex- 
pended in  that  manner,  were,  in  fact,  A^NIPI  funds  as  oi:)posed  to  of- 
ficers' own  moneys  ? 


5930 

Mr.  Lilly.  Looking  back  now,  yes. 

Mr.  Sanders.  TAPE  was  not  in  existence  in  1968  ? 

Mr.  Lellt.  It  was  not  in  existence  in  1968. 

Mr.  Sanders.  So  it  would  have  been  MPI  as  opposed  to  AMPI  ? 

Mr.  Lilly.  Right. 

Mr.  Sanders.  Mr.  Nelson  was  president  that  year  ? 

Mr.  Lilly.  He  was  general  manager. 

Mr.  Sanders.  General  manager  ? 

Mr.  Lilly.  Right. 

Mr.  Sanders.  In  one  of  our  earlier  interviews,  conducted  by  this 
staff,  there  is  mention  of  the  contribution  of  $100,000  to  Hubert  Hum- 
phrey. There  is  no  time  frame  placed  on  it. 

Do  you  have  knowledge  of  when  such  a  contribution  would  have 
been  made,  or  that  in  fact,  first  of  all,  that  one  was  made  ? 

Mr.  Lilly.  I  have  some  notes,  and  I  will  go  into  what  contributions 
I  do  have.  I  have  some  direct  contributions  going  to  Senator  Hum- 
phrey's campaign  in  1970,  and  I  have  some  records  in  1971. 

I  have  some  records  of  1968  of  where  they  went  into  his  campaign. 
And  the  total,  I  am  not  sure. 

There  is  another  item  that  I  will  discuss  while  we  are  discussing, 
and  it  gets  into  a  total  new  area,  and  that  is  with  Valentine  &  Associ- 
ates, because  this  is  possible — some  of  this  money  could  have  ended 
there. 

Mr.  Sanders.  I  do  not  want  to  get  into  Valentine  right  now.  I  guess 
what  I  do  want  to  know  is,  if  a  $100,000  one-time  payment  had  been 
made  to  Hubert  H.  Humphrey,  that  would  have  stood  out  in  your 
memory  and  you  would  have  known — — 

Mr.  Lilly.  I  did  not  make  it  and  I  have  no  knowledge  of  it. 

Mr.  Sanders.  Aside  from  the  Valentine  possibility,  do  you  think 
other  smaller  payments  could  have  totalled  $100,000  ? 

Mr.  Lilly,  I  doubt  it.  The  records  that  I  have  and  the  amounts 
of  money  that  I  actually  handled  to  him  would  not  total  that  amount 
of  money. 

Mr.  Sanders.  From  on  or  about  the  date  of  the  November  1968  elec- 
tion until  the  time  of  this  payment  to  Semer,  do  you  know  of  payments 
by  AMPI  to  any  other  political  adjuncts  ? 

Mr,  Lilly.  You  are  talking  about  political  funds,  as  we've  been  talk- 
ing about,  handled  in  this  manner.  No,  I  do  not,  from  after  the  election 
until  December  1969.  There  were  some  TAPE  contributions  made 
during  that  period  which  were  officially  reported,  but  none  of  the  cor- 
porate funds. 

Mr.  Sanders.  Well,  before  you  delivered  this  money  to  Semer,  did 
you  have  only  one  conversation  with  Nelson  about  this  subject? 

Mr.  Lilly.  I  am  sure  that  I  had  more,  I,  truthfully,  cannot  re- 
member. I  may  have  said  "a  conversation."  I^et  me  correct  it  to  say  that 
I  am  sure  that  I  had  conversations,  but  I  really  do  not  recall  and  I  do 
not  keep  that  in  my  diary.  And  I  do  not  Imow. 

But  I  must  have  had  couA^ersations  with  him  about  it. 

Mr.  Sanders.  And  in  your  phone  call  to  Semer  prior  to  your  meeting 
with  him 

Mr.  Lilly,  Right. 

Mr.  Sanders  [continuing].  Can  you  reconstruct  that  conversation? 

Mr.  Lilly.  We  had  had — I  cannot — I  can  paraphrase  it,  but  I  cannot 


5931 

reconstruct  the  conversation.  I  had  been  told  that  Mr.  Semer  would  be 
the  one,  when  the  money  was  ready,  that  I  would  be  working  with.  I 
was  instructed  to  contact  Mr.  Semer. 

We  gave  him  notice,  so  he  could  make  arrangements  to  meet  me — 
and  to  where  we  would  meet,  because  this  had  not  been  determined — 
and  when  I  called  Mr.  Semer,  I  am  sure  it  was  before  August  1,  be- 
cause he  would  have  had  to  travel  from  Washington,  D.C.,  to  Dallas 
and  he  would  have  made  reservations  and  various  other  things. 

So  what  day  I  called  him,  I  am  not  sure.  But  I  did  tell  him  the  time 
rtr  approximately  the  time  that  I  would  meet  him  in  Dallas,  possibly. 
And  the  date,  certainly,  I  recall  that  because  he  did  arrive  in  Dallas 
on  that  date. 

Mr.  Sanders.  But  when  you  first  spoke  with  him  on  the  telephone, 
did  it  appear  to  you  that  he  knew  why  3'^ou  were  calling,  or  did  you 
have  to  explain  it  to  him  ? 

Mr.  Lilly.  He  knew  why  I  was  calling. 

Mr.  Sandeks.  He  knew  ? 

Mr.  Lilly.  Yes. 

Mr.  Sanders.  WTiat  appeared  to  you  to  be  the  extent  of  his  knowl- 
edge about  the  purpose  of  your  contact  ? 

Mr.  Lilly.  I  think  that  he  was  aware  that  I  would  be  contacting  him, 
that  I  would  be  delivering  him  some  money.  As  I  remember  the  con- 
versation, no  numbers  were  even  mentioned,  but  we  were  to  meet  in 
Dallas.  I  was  ready  to  meet  him  in  Dallas  at  a  certain  date. 

And  I  would  say  that  he  had  had  knowledge  as  to  the  amount  that 
it  would  be.  as  to  when  it  would  be  delivered,  as  to  where  it  would  go 
to ;  because  T  am  certain  that  this  required  him  to  make  some  contact 
where  he  would  have  to  deliver  it  to. 

Mr.  Sanders.  OK. 

Mr.  Nicholas.  On  that  point,  Alan,  I  want  to  stay  on  the  record. 

Two  things,  Mr.  Lilly :  One  is,  Mr.  Sanders  has  repeatedly  stated  in 
his  questions  that  you  had  made  this  phone  call  to  Mr.  Semer  based 
upon  your  testimony. 

Mr!  Lilly.  Eight. 

tMr.  Nicholas.  Do  you  have  any  independent  recollection 
Mr.  Lilly.  No,  I  do  not. 
,  Mr.  Nicholas  [continuing].  Of  having  made  the  telephone  calls? 

Mr.  Lilly.  No.  I  do  not. 

Mr.  Nicholas.  Then  why  do  you  keep  referring  that  you  made  the 
phone  calls? 

Mr.  Lilly.  Well,  T  am  having  to  assume — I  think  my  diary  shows  T 
did  not  go  to  Washington,  D.C.,  during  that  time;  certainly.  I  would 
not  have  written  to  him.  So  I  must  have  had  to  have  telephoned  him. 

Mr.  Nicholas.  Covdd  he  have  called  vou  ?  The  point  is  that. 

Mr.  TiiLLY.  Yes,  it's  possible.  It's  quite  possible  he  could  have  called 
me. 

Mr.  Nicholas.  Or  could  Harold  Nelson  have  called  him,  and  put 
you  on  the  line  together,  or  anything  of  this  nature? 

Mr.  Ltlty".  That  (  ould  have  easily  have  hapoened. 

Mr.  Nicholas.  The  reason  I  am  asking  these  questions  is  because 
these  gentlemen,  as  T  understand,  are  depending-  unon  you  being  as 
accurate  as  you  can  be ;  and  when  vou  say  you  make  a  phone  call,  they 
are  going  to  assume  that  vou  made  it. 


5932 

Is  there  any  way  to  check  any  records  at  the  AMPI  office,  or  the 
MPI  office  or  your  telephone  to  find  out  if,  in  fact,  you  called  Semer's 
number  in  Washington  ? 

Mr.  Lilly.  I  would  say  the  only  way,  knowing  how  we  kept  our  tele- 
phone calls — we  kept  no  record.  I  would  say  that  you  would  have  to  get 
it  through  the  telephone  company  as  to  the  date  it  was  called,  the  bill- 
ing at  the  office  that  we  would  have  from  the  telephone  company. 

In  1969,  we  did  not  have  a  WATTS  Ime.  I  assume  even  the  WATTS 
line  would  register  the  number.  But  this  would  have  been  in  December 
of  1969.  I  am  not  sure  when  we  installed  the  WATTS  line,  so  I  would 
say  that  we 

Mr.  Nicholas.  It  would  be  July  of  1969  ? 

Mr.  Lilly.  I  mean  July  of  1969. 

Mr.  Nicholas.  You  keep  referring  to  the  December  date,  because  in 
your  mind  that  is  when  you  signed  the  note. 

Mr.  Lilly.  That  is  true. 

Mr.  Nicholas.  When  you  contacted  Mr.  Semer  in  Dallas  at  the 
Executive  Inn,  did  you  have  his  room  number,  telephone  number,  and 
so  forth  ? 

Mr.  Lilly,  No,  I  went  to  the  Executive  Inn.  I  knew  that  he  would 
be  there.  I  checked  at  the  desk  to  get  his  room  number  and  called  him 
on  the  interhouse  phone. 

Mr.  Nicholas.  Was  he  actually  registered  ? 

Mr.  Lilly.  He  was  registered  and  in  his  room. 

Mr.  Nicholas.  On  or  about  August  1,  1969? 

Mr.  Lilly.  That  is  right. 

Mr.  Nicholas.  When  Mr.  Sanders  asked  you — had  you  personally 
made  contributions  to  the  1968  campaign  to  Hubert  Humphrey  or  to 
his  reelection  or  for  his  election  or  political  campaign  for  election,  at 
that  time  did  you,  in  making  your  contribution — you  stated  you  made 
them  out  of  your  bank  account  ? 

Mr.  Lilly.  Eight. 

Mr.  Nicholas.  Some  of  them,  is  that  right  ? 

Mr.  Lilly.  That  is  right. 

Mr.  Nicholas.  Because  TAPE  was  not  in  existence. 

Mr.  Lilly.  That  is  right. 

Mr.  Nicholas.  So  you  would  write  checks  on  vour  bank  account  to 
pay  certain  committees  for  H.  H.  H..  which  is  Hubert  H.  Humphrey. 
And  you  have  those  checks,  do  you  not  ? 

Mr.  Lilly.  I  do. 

Mr.  Nicholas.  During  the  coui*sc  of  tlie — after  those  contributions 
were  made,  and — was  there  any  plan  to  ])ay  you  back  for  the  money  you 
were  spending  out  of  your  own  personal  account  to  contribute  to 
Hul)ert  Humphrey's  campaign  ? 

Mr.  Lilly.  MPI.  in  1968.  was  reimbursing  me,  either  by  salarv  bo- 
nuses, salary  advances,  expense  advances.  There  were  a  number  of  tliese 
checks. 

Mr.  Nicholas.  I  want  to  ask  you  this  question  since  in  the  year  of 
1978.  which  is  this  year 

Mr.  Lilly.  Yes. 

Mr.  Nicholas  TcontinuiniQ:!.  Has  the  Internal  Revenue  Service  com- 
menced a  civil  investigation/audit  of  yours  and  Mrs.  Lilly's  personal 
i  ncome  tax  retu  rns  ? 


59^3 

Mr.  Lilly.  They  haA^e. 

Mr.  Nicholas.  Would  that  be  about  March  of  1973  ? 

Mr.  Lilly.  March  of  1973. 

Mr.  Nicholas.  During  that  investigation,  did  the  figure  of  $13,800 
come  up  as  to  where  you  obtained  this  money  from,  or  is  there  such  a 
figure  that  exists,  that  was  text  or  subject  matter  of  a  dispute  or  con- 
versation between  you  and  Mr.  Isham  ? 

Mr.  Lilly.  Yes,  there  was — in  the  Internal  Revenue  investigation, 
that  particular  check  has  not  come  up,  not  to  my  knowledge.  But  Mr. 
Isham  said  from  the  year  of  1968,  it  had  been  carried  forward  on  his 
accounts  receivable  in  1968  and  1969. 

In  tlie  year  of  1970,  on  August  the  27th,  I  wrote  AMPI  a  check  for 
$13,800.  It  possibly  might  have  been  $13,840,  but  it  was  written  on  the 
account  at  the  Citizens'  National  Bank  where  these  other  funds  had 
been  handled;  to  pay  money  that  I  could  not  account  for  the  j^ear  of 
1968,  that  they  had  advanced  me.  But  I  had  no  receipts  or  no  checks 
for — apparently  it  went  out  in  cash  and  this  money  went  back  to  AMPI 
to  resolve  these  accounts  receivable. 

Mr.  Nicholas.  All  right. 

Now,  in  other  words,  as  I  understand,  Mr.  Isham  then  told  you 
that  they  were  approximately  $13,800  short. 

Mr.  Lilly.  Right. 

Mr.  Nicholas.  You  could  not  account  for  these  moneys  ? 

Mr.  Lilly.  Right. 

Mr.  Nicholas.  Did  Mr.  Isham  tell  you  that  you  would  then  have  to 
pay  AMPI  back  the  $13,800  ? 

Mr.  Lilly.  He  said  it  would  have  to  be  paid  back ;  this  was  discussed 
with  Mr.  Nelson. 

Mr.  Nicholas.  All  right. 

Mr.  Lilly.  And  Mr.  Isham. 

Mr.  Nelson  informed  me  to  go  to  tlie  Citizens'  National  Bank,  borrow 
the  money  in  the  form  of  a  personal  note,  recover  the  money  from  the 
attorneys  to  pay  the  $13,800  back,  or  approximately  $13,800—840— 
back. 

Mr.  NichoLu\s.  Did  you  do  that  ? 

Mr.  Lilly.  I  did  do  that. 

Mr.  Nicholas.  Is  there  such  a  note  in  existence  ? 

Mr.  Lilly.  There  is  a  note  in  existence. 

Mr.  Nicholas.  Was  that  $13,800  paid  back  through  the  attorneys' 
plan  for  the  payment  of  these  notes  that  were  created  by  Isham  and 
Nelson,  and  whoever  else  created  it  ? 

Mr,  Lilly.  That  is  correct. 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 

[Whereupon,  at  1 :30  p.m.,  the  hearing  in  the  above-entitled  matter 
recessed  to  reconvene  at  2  :15  p.m.  later  the  same  day.] 

Afternoon  Session 

Mr.  Weitz.  Mr.  Lilly,  I  would  like  to  turn  to  the  arrangements  for 
repayment  of  the  $100,000  loan.  On  exliibit  No.  2,  the  name  of  Joe 
Long  appeai-s,  and  it  is  marked  with  a  check  and  an  OK.  I  believe  you 
said  it  was  in  your  handwriting. 


5934 

Mr,  Lilly.  Yes. 

IVIr.  Weitz.  Would  you  like  to  tell  us  your  contact  with  Mr.  T-^ong 
or  any  others  affiliated  with  him,  and  the  way  in  which  he  repaid 
moneys  to  you  ? 

Mr.  Lilly.  Mv.  Long  is  a  partner  with  ]Mr.  Jacobsen.  It  is  probably 
going  to  be  hard  for  me  to  separate  the  two. 

On  December  18,  1969,  I  received  $5,000  cash  from  Joe  Long.  I  do 
not  know  if  this  came  from  Mr.  Long  and  Mr.  Jacobsen.  or  only  Mr. 
Long.  But  my  notes  indicate  that  I  had  $5,000  from  Joe  Long,  but  it 
could  be  both  of  them. 

Mr.  Weitz.  He  gave  you  the  money  in  cash  ? 

Mr.  Lilly.  Tn  cash. 

Mr.  Weitz.  Where  did  he  give  you  that  money  ? 

Mr.  Lilly.  I  would  say  that  he  gave  me  the  money  in  Austin,  Tex. 
That  happens  to  be  where  the  bank  is  located,  and  I  noticed  at  about 
that  time  I  paid  $5,000  cash  on  the  note.  T  have  m  my  notes  the  i2th 
and  the  18th,  and  I  have  on  another  note,  the  12th  and  the  17th. 

I  would  say  this  would  be  the  $5,000  that  I  did  receive  from  him,  and 
did  deposit  and  pay  on  the  note. 

Mr.  Weitz.  Mr.  Long's  and  Mr.  Jacobsen 's  law  offices  are  also  in  Aus- 
tin. Is  that  correct? 

Mr.  Lilly.  True,  that  is  correct. 

Mr.  Weitz.  Exhibit  3,  which  is  a  copy  of  the  $100,000  note  and  re- 
newal note,  isn't  there  a  payment  indicated  on  December  IT,  1969,  for 
$5,000  curtailment  of  the  note  ? 

Mr.  Lilly.  True. 

Mr.  Weitz.  Is  it  your  recollection,  and  since  there  is  no  other  pay- 
ment on  the  note  until  February,  tliat  that  $5,000  was  received  by  you 
and  paid  on  the  note  on  December  17  ? 

Mr.  Lilly.  That  is  true,  l^ecause  I  have  a  memo  that  I  have  $5,000 
cash  from  Joe  Long  at  that  particular  time. 

Mr.  Weitz.  Did  he  mention  to  you  whether  or  not  Mr.  Jacobsen 
had  participated  in  that  ? 

Mr.  Lilly.  I  do  not  remember  him  mentioning  it  to  me.  He  gave  me 
the  cash  and  I  applied  it  to  the  note. 

Mr.  Weitz.  Now,  staying  with  Mr.  Long  for  another  moment,  are 
you  aware  of  any  subsequent  payment  from  him  ? 

Mr.  Lilly.  Yes.  Mr.  Long  and/or  Mr.  Jacobsen  had  a  series  of  pay- 
ments over  this  period.  There  was — the  next  notation  that  I  have  is 
June  15, 1970,  $5,000  from  Jacobsen  and  Long. 

I  will  change  that  statement.  I  will  explain  that  further. 

The  next  payment  from  Jacobsen  and  T^ong  was  the  12th  and  I7th. 
a  cash  payment  of  $5,000  wliich  we  had  mentioned.  On  February  2, 
1970,  I  have  a  cash  payment  of  $5,000  from  Jacobsen  and  Long.  On 
August  6,  1970,  two  entries  totaling  $10,000  from  Jacobsen  and  Long. 

Then  that  totals  $20,000  cash  ^from  December  17.  1969  through 
August  6. 1970  from  Jacobsen  and  Long,  or  Long  and  Jacobsen. 

Mr.  Weitz.  Actually  in  each  case,  did  Mr.  Long — was  he  the  one  who 
gave  you  the  cash,  or  did  sometimes  the  money  come  from  Jacobsen? 

Mr.  Lilly.  At  one  time.  Mi'.  Long  and  Mr.  Jacobsen  gave  me  a  check. 
I  believe  each  one  of  them  happened  to  l>e  for  $2,500  cash. 

I  went  to  anotlier  bank  in  Austin.  I  believe  it  was  Community  Na- 
tional, a  bank  also  that  they  had  a  major  interest  in,  and  cashed  two 


5935 

checks  without  having  endorsed  them.  They  were  made  out  to  "cash," 
and  the  two  of  them  totaled  $5,000.  Mr.  Jacobsen  was  present  at  that 
particular  time  in  the  office  where  I  picked  up  the  checks. 

Mr.  Weitz.  What  was  the  name  of  the  bank,  Community  National  ? 

Mr.  Lilly.  Community  National,  I  believe,  is  the  name  of  the  bank. 
They  have  controlling  interests  in  three  banks  in  Austin,  but  I  believe 
it  was  Community  National. 

Mr.  Weitz.  What  was  the  third  bank  ?  You  mentioned  the  Citizens' 
National  Bank  and  the  Comnumity  National. 

Mr.  Lilly.  Citizens'  National,  Community  National  and  the  First 
State  Bank,  or  it  might  be  the  First  National  Bank.  It  is  in  south 
Austin  ;  that  is  all  I  remember. 

Mr.  Weitz.  Do  you  recall  the  approximate  time  when  you  cashed 
those  checks  in  Mr.  Jacobsen's  presence  ? 

Mr.  Lilly.  He  was  not  present.  I  picked  up  the  checks  from  him,  and 
Avent  to  the  bank  alone. 

Mr.  Weitz.  You  said  at  one  point  though,  because  you  did  not  en- 
dorse them,  that  Mr.  Jacobsen  was,  in  fact,  present  at  Community  Na- 
tional Bank  with  you. 

Mr.  Lilly.  No.  If  I  did,  that  w^as  an  error.  I  went  to  Mr.  Jacobsen's 
and  Mr.  Long's  office.  Both  of  them  were  present.  They  gave  me  two 
checks  made  out  to  "cash,"  $2,500  each,  and  I  in  turn  went  alone  to 
the  Community  National  Bank.  They  called  an  officer,  and  told  them 
that  I  would  be  coming  out  there,  that  I  had  two  $2,500  checks,  and  to 
cash  them  for  me. 

And  I  went  to  the  Community  National  Bank,  and  I  was  alone. 
Mr,  Jacobsen  was  present  when  the  checks  were  given  to  m.e. 

Mr.  Weitz.  At  this  point  I  think  it  would  be  useful  to  enter  into  an 
exhibit  a  number  of  items:  First,  exhibit  No.  6,  which  is  a  schedule 
compiled  by  you  of  various  note  transactions,  and  transactions  with 
these  various  individuals  and  others.  And  this  is  prepared  by  you  ? 

["Wliereupon  the  document  referred  to  was  marked  as  Lilly  exhibit 
No.  fi  for  identification.^! 

Mr.  Lilly.  Prepared  by  my  accountant  that  worked  for  me  there 
with  AMPI. 

Mr.  Weitz.  T\'Tien  was  this  prepared  ? 

Mr.  Lilly.  Within  the  last  2  weeks. 

Mr.  Weitz.  But  you  have  reviewed  this,  and  this  is  accurate  to  the 
best  of  your  knowledge  ? 

Mr.  Lilly.  To  the  best  of  my  knowledge  and  ability,  it  is  accurate. 

Mr.  Weitz.  Let  me  mark  as  exhibit  7,  xeroxed  copies  of  two  checks, 
both  on  the  account  of  Jacobsen  and  Long,  one  for  $2,000  written  to 
Joe  Long ;  one  for  $3,000  written  to  Jake  Jacobsen,  both  signed  by  Eula 
Bulkley,  B-u-1 — it  looks  like  B-u-1-k-l-e-y.  And  the  endorsements  on 
the  back  of  one  is  Joe  R.  I^ng  and  Bob  A.  Lilly,  and  the  other  is  Jake 
Jacobsen  to  Bob  A.  Lilly. 

[Whereupon,  the  documents  referred  to  were  marked  Lilly  exhibit 
No.  7  for  identification.^] 

Mr.  Weitz.  HaA-e  you  seen  those  checks  ? 

Mr.  Lilly.  That  is  my  signature,  there  is  no  doubt  that  I  have  seen 
those  checks,  and  they  compare  to  the  date  that  I  reduced  those  to  cash 
at  the  Citizens'  Bank. 


1  Se«  p.  5999. 

2  See  p.  6002. 


5936 

Mr.  Weitz.  Does  it  refresh  your  recollection,  that  perhaps  you  cashed 
those  checks  with  one  or  more  of  those  gentlemen  at  the  bank,  or  even 
without  them,  in  order  to  make  the  payment  ? 

Mr.  Lilly.  I  would  not  have  had  to  have  had  either  one  of  them 
present  at  the  bank.  One  of  them  could  have  been  present.  I  do  not 
really  recall  that  this  was  the  way.  I  really  thought  it  was  in  cash  until 
you  showed  me  this,  and  T  really  cannot  recall  if  one  of  them  was  with 
me  or  not.  But  I  did  know  some  of  the  principal  officers  at  the  bank,  so 
it  would  not  have  been — I  notice  my  name  is  on  the 

Mr.  Weitz.  Now,  in  exhibit  6  on  the  third  page  with  the  schedule  of 
payments  to  you  from  Long  and  Jacobsen,  you  have  one  payment  ol 
$5,000.  This  would  probably  be  received  or  deposited  on  June  15, 1970. 

I  show  j'ou,  and  I  mark  as  exhibit  No.  8,  a  xeroxed  copy  of  two  checks 
dated  June  12,  1971,  to  Jake  Jacobsen  in  the  amount  of  $2,875 ;  another 
to  Joe  R.  Long  in  the  am.ount  of  $2,125 ;  again,  signed  by  Eula  Bulkley, 
and  the  back  one  is  endorsed  Joe  R.  Long,  for  deposit  only,  paid  to  the 
order  of  the  First  National  Bank,  Bob  A.  Lilly. 

And  the  second  check  is  endorsed  Jake  Jacobsen,  pay  to  the  order  of 
First  National  Bank,  Bob  A.  Lilly. 

[Whereupon,  the  documents  referred  to  were  marked  as  Lilly  exhibit 
No.  8  for  identification.*] 

Mr.  Weitz.  Do  you  recognize  these  checks,  and  are  those  your  sig- 
nature endorsements  on  the  back  ? 

Mr.  Lilly.  Yes;  they  are  my  endorsements,  and  I  do  recognize  the 
checks.  I  have  reason  to.  I  show"  this  as  cash.  Those  did  go  into  my  own 
personal  bank  account  at  Evant,  Tex.  I  do  have  a  check  for  $5,000  from 
Evant,  Tex.,  to  the  Citizens'  National  Bank  at  Austin.  Tex.,  bringing 
the  $5,000  back  out.  And  I  have  it  on  this  at  the  6th  and  15th  of  1970. 

So  this  went  into  the  wrong  account.  It  did  come  back  out. 

Mr,  Weitz.  But  you  deposited  it  in  that  account,  didn't  you  ? 

Mr.  Lilly.  I  did. 

Mr.  Weitz.  Is  there  any  reason  that  you  deposited  it  first  in  that 
account  ? 

Mr.  Lilly.  No.  I  really  thought  that  the  checks  had  been  sent  from 
Jacobsen  and  Long  to  this  bank  in  Evant,  Tex.,  but  evidently  I  en- 
dorsed the  checks  and  sent  them  myself.  Then  when  I  did  realize  it, 
I  wrote  a  check  for  $5,000.  It  was  within  one  day  or  two.  It  came  back 
into  the  Citizens'  National  Bank, 

Mr.  Weitz.  Now,  on  your  summary  sheet  on  exhibit  6,  as  you  say, 
you  show  a  total  of  $20,000  cash  pavm'ents  on  the  notes  plus  this  $5,000 
payment  on  or  about  June  15.  1970,  for  a  total  of  approximately 
$25,000. 

"^^^at  was  the  purpose  of  the  June  1970,  $5000  payment?  Did  that 
go  to- 

Mr.  Lilly.  The  June  payment  went  to  the  loan  on  note  transactions, 
on  June  15, 1970,  on  payment  on  notes;  on  the  note  transaction  portion 
of  it.  there  is  a  payment  on  that  particular  date  of  $7,503.77;  $617.27 
interest. 

It  was  either  at  that  particular  time,  or  on  August  6.  1970.  when  a 
payment  was  made  on  that  note  of  $55,488.50,  with  $408  interest  paid. 
And  it  has  been  identified  as 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 

•  Sep  p.  600.^. 


5937 

Mr.  Weitz.  On  the  record. 

Mr.  Lilly.  The  $5,000  check  that  had  been  erroneous!}'  deposited  in 
my  personal  account  at  the  First  National  Bank  at  Evant,  Tex.,  was 
withdrawn.  I  would  say,  within  1  Aveek.  I  am  not  sure  of  the  exact  date 
of  the  check,  and  it  Avas  made  payable  directly  to  the  Citizens'  National 
Bank  and  paid  on  the  note. 

It  Avas  not  deposited,  and  one  of  these  note  payments  Avill  reflect  that 
particular  payment. 

Mr.  Wp:itz.  Did  you  ever  discuss.  AA'ith  either  Mr.  Jacobsen  or  Mr. 
Long,  the  purposes  for  Avhich  these  payments  AA-ere  going? 

Mr.  Lilly.  No.  I  have  discussed  political  contributions.  I  needed 
to  make  a  payment  on  a  note  at  Citizens"  National  Bank.  I  needed  a 
political  contribution  for  some  reason,  outside  of  making  a  political 
contribution,  I  am  not  sure  that  I  did  discuss  as  to  AA'hat  they  would 
be  going  for. 

I  had  reason  to  belicA-e  that  they  AA^ere  officers  in  the  bank;  which 
they  Avere.  Loans  of  $100,000  having  been  made,  it  must  haA^e  been 
discussed  at  a  board  of  directors  meeting,  and  of  course,  they  were 
both  on  the  board  of  directors. 

]\Ir.  Weitz.  lYhen  you  say  you  just  told  them  for  ix)litical  purposes, 
did  you  tell  them  that  or— — 

Mr.  Lilly.  No  ;  I  told  them  this.  I  told  them  for  political  purposes. 

Mr.  Weitz.  Both  Mr.  Long  and  Mr.  Jacobsen? 

Mr.  Lilly.  I  could  make  telephone  calls.  "I  need  some  cash  for  polit- 
ical purposes." 

Mr.  AVeitz.  Well,  how  would  you  put  it?  That  does  not  exactly  ring 
true. 

Would  it  be  more  likely  that  you  say  "for  some  contribution"? 

Mr.  Lilly.  For  a  contribution,  "I  need  some  money  for  a  political 
contribution." 

Mr.  Weitz.  Would  you  normally  tell  them  who  or  Avhat  it  was  for? 

Mr.  Lilly.  No. 

Mr.  Weitz.  But  you  would  say  it  in  those  general  terms? 

Mr.  Lilly.  General  terms,  yes. 

Mr.  Weitz.  Was  it  also  ever  discussed  with  them  that  they  could 
recoup  these  funds  through  excess  billings  to  the  firm  ? 

Mr.  Lilly.  No,  I  did  not  discuss  it  with  them. 

Mr.  Weitz.  Are  you  aAvare  whether  anyone  else  discussed  it  with 
them? 

Mr.  Lilly.  Not  from  personal  knowledge. 

Mr.  Weitz.  Are  you  aware,  if  in  fact — whether  any  of  these  pay- 
ments Avere  recouped  by  them,  or  whether  there  were  any  invoices  from 
the  firm  o^  Jacobsen  and  Long  that  Ave  re  reflected  in  some  of  these  pay- 
ments? 

]\Tr.  Lilly.  There  were  invoices  from  Jacobsen  and  Long.  A  number 
of  them  came  across  my  desk  with  my  initials  on  them  for  approval 
for  payment.  There  might  be  some  correlation  betAveen  the  dates  that 
they  made  ach^ances  to  me  and  the  dates  on  AA-hich  they  billed.  ^ 

I  haA'e  not  had  the  privilege  of  looking  at  their  checks  to  see  if  there 
is  a  correlation,  but  possibly  there  is.  and  those  particular  documents 
would  have,  probably,  crossed  my  desk,  and  most  of  the  Jacobsen  and 
Long  bills  crossed  my  desk  for  approA-^al  for  payments;  be  it  for  this 
or  for  other  purposes. 


5938 

Mr.  Weitz.  For  example,  let  me  mark  as  exhibit  9,  and  ask  you  about 
a  voucher  and  a  copy  of  a  check.  The  ^'oucher  is  from  Jacobsen  and 
Long  in  the  amount  of  $10,000  dated  January  6,  1970.  It  is  approved 
by  perhaps,  Robert  Isham.  I  am  not  sure.  I  will  have  you  identify  that 
in  a  moment. 

There  is  a  Xerox  of  a  note  attached  saying.  "Bob  Isham."  This  is  a 
special  billing  from  Joe  Long,  and  the  check  is  written  for  $10,000, 
Jacobsen  and  Long,  on  January  20, 1970. 

[Whereupon,  the  documents  referred  to  were  marked  as  Lilly  ex- 
hibit No.  9  for  identification.^] 

Mr,  Weitz.  Can  you  identify  that  for  us? 

Mr.  LiixY,.  Yes,  I  can  identify  it.  It  is  one  of  the  repayments;  the 
writing,  "Bob  Isham.  This  is  a  special  bill,"  indicates  to  me.  from 
some  of  the  advances  that  Jacobsen  and  Long  had  given,  that  this  was 
to  pay  them  back  for  the  $5,000  that  had  been  contributed  on  Decem- 
ber 17, 1969. 

Mr.  Weitz.  Are  you  fairly  certain  that  that  would  be  the  repay- 
ment for  that  $5,000  ? 

Mr.  Lilly.  I  am  fairly  certain  that  it  would  be. 

Mr.  Weitz,  All  right. 

Is  that  your  handwriting,  that  note  to  Bob  Isham  ? 

Mr.  Lilly.  That  is  my  handwriting. 

Mr.  Weitz.  That  is  your  handwriting,  so  presumably 

Mr.  Lilly.  And  I  say  that  I  approved  the  bill.  Here's  my  "OK — 
B.A.L."atthetop. 

Mr.  Weitz.  And  who  is  the  [indicating]  ? 

Mr.  Lilly,  It  says  approval  of  payment,  R.  V.  would  be  Hon  Yoss, 
Bob  Isham's  assistant  there  in  the  office  at  the  time,  assistant  comp- 
troller. 

Mr.  Weitz.  I  want  to  mark  for  identification  exhibit  10,  another 
check  to  Jacobsen  and  Long  in  the  amount  of  $10,000.  It  is  dated  April 
25,  1970,  and  the  attached  billing  for  a  particular  piece  of  litigation 
from  Joe  Long,  and  the  bill  dated  April  21,  1970,  is  addressed  to  you. 

[Whereupon,  the  docimient  referred  to  was  marked  Lilly  exhibit 
No.  10  for  identification.^] 

Mr.  Weitz.  Could  you  look  at  that  and  see  whether  that  is  for 
legitimate  pui-poses,  or  part  of  this  payback  scheme  for  those 
purposes? 

Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Weitz.  Let's  get  back  on  the  record. 

Tjooking  again  at  exhibit  10,  do  you  recall  what  this  payment  may 
have  been  for  ? 

Mr.  Lilly.  Exhibit  10,  which  is  a  $10,000  check  to  Jacobsen  and 
Ix)ng,  OK'd  with  my  initials,  and  sent  to  Bob  Isham  for-  a  payment. 
I  would  be  convinced  from  looking  at  my  notes  on  February  2,  1970, 
I  have  $5,000  cash  having  come  in  from  Jacobsen  and  Long  and  that 
would  be  a  billing  for  Februarv  2, 1970. 

Mr.  Weitz.  Just  as  a  general  matter,  Avould  you  approve  all  of  their 
checks  that  came  in,  or  only  the  ones  that  were  repayments  to  you  or 
some  of  both  ? 


1  See  p.  0004. 

2  See  p.  6007. 


5939 

Mr.  Lilly.  Some  of  both  that  I  would  approve.  At  times,  I  would 
have  Mr.  Nelson  approve  them.  If  I  felt  that  I  really  was  not  totally 
aware  of  what  might  have  happened,  or  that  he  should  be  aware  of 
what  was  happening,  and  I  Avould  go  to  him.  And  you  will  find  some 
of  the  billings  with  my  initials,  and  his  initials  on  it. 

I,  too,  discussed  it  with  Bob  Isham,  and  he  felt  that  this  would  be 
a  mucli  l>etter  situation  if  I  cleared  some  of  the  billings  with  Mr. 
Nelson. 

Mr.  Weitz.  So  the  only  way  you  would  be  able  to  tell  as  to  particular 
reimbursements  from  them,  would  be  to  look  at  each  individual? 

Mr.  Lilly.  I  would  have  to  tie  it  back,  that  is  right. 

Mr.  Weitz.  In  general  when  you  received  a  payment  from  them, 
would  they  tell  you  specifically  when  they  were  going  to  seek  reim- 
bursement from  that,  or  would  you  arrange  it  directly  with  Isham? 

How  would  they  be  reimbursed  ? 

Mr  Lilly.  There  was  no  prearranged — I  would  get  cash  from 
Jacobsen  and  Long,  and  a  billing  would  come  in,  and  of  course,  a 
great  many  of  them  ci-ossed  my  desk.  And  of  course,  it  would  be  paid 
off,  and  I  would  not  l>e  aware  of  the  time  they  were  going  to  bill  or 
the  amount  they  were  going  to  bill  at  the  time. 

There  was  no  discussion  between  Jacobsen  and  Long  or  myself  on 
that. 

Mr.  Weitz.  All  right. 

I  have  exhibit  No.  11  marked  for  identification;  check  and  voucher 
dated  July  22,  1970,  for  $22,000  from  Jacobsen  and  Long,  and  the 
breakdown  on  the  attached  invoice,  which  is  approved  bv  you,  indi- 
cates a  $10,000,  a  $6,000,  and  a  $6,000  matter. 

[Whereupon,  the  documents  referred  to  were  marked  Lilly  exhibit 
No.  11  for  identification,*] 

Mr.  Weitz,  Looking  at  that,  can  you  identify  whether  any  of  those 
payments  were  recoupments  for  money  to  you  ? 

Mr.  Lilly.  I  would  be  inclined— $iO,Odo  portion  of  the  $22,000  bill- 
ing from  Jacobsen  and  Ix)ng  on  July  16.  I  Avould  tliink  would  refer 
l)ack  to  the  June  15,  1970,  contribution  for  i)olitical  purposes  that  they 
made.  It  was  in  a  check  form.  It  went  to  Evant,  Tex.,  and  later  back 
to  the  bank. 

Mr.  Weitz.  You  do  not  know  that  for  a  fact,  but  you  assume  that 
because  it  follows  about  a  month  after  the  earlier  payment  ? 

Mr.  Lilly.  Yes;  and  it  is  an  even  amount. 

Mr.  Weitz.  I  have — and  rather  than  go  through  each  lengthy  pe- 
riod— I  have  a  series  of  checks.  There  are  20  checks  here  and  invoices, 
and  each  of  these  indicates,  as  part  of  their  billing,  in  various  amounts 
as  much  as  $5,000,  and  the  majority  of  them,  $1,500  each,  are  designated 
as  "professional  services  rendered  in  excess  of  the  amount  covered 
by  the  retainer,"  and  on  each  bill  there  is  a  retainer  of  $2,500;  and 
these  various  amounts  for.  as  I  say,  professional  sei'vices  rendered  in 
excess,  and  some  or  all  o*"  them — some  ai-e  also  Olv'd  by  you. 

Now,  do  you  know  whether  in  everv  case  when  they  billed  in  this 
fashion,  it  would  be  for  rei)ayment  to  you  to  recover  payments  made; 
and  would  only  some  of  them  be 

INIr.  Lilly.  Only  some  of  them.  A  general  thing  following  approxi- 
mately 2  oi-  .'')  weeks,  or  1  month  behind  the  time,  when  others  would 

*  See  p.  6010. 


5940 

be  the  retainer,  which  was  $2,500;  and  those  fees  in  excess  of  retainer 
usually  would  pertain  to  flights  to  Washino:t()n,  D.C.,  or  some  other 
point,  or  to  represent  AMPI  in  some  other  capacity,  legitimately,  many 
of  them  would  be — -and  I,  too,  would  have  approved  those  as  well  as 
other  billing's, 

Mr,  Weitz.  Do  you  have  any  way  of  knowing  then  exactly  how  much 
was  recou})ed  by  Jacobsen  and  Long  with  reg-ard  to  the — what  you  in- 
dicate to  be  $25,000  paid  to  you  ? 

Mr.  Lilly,  I  have  no  sure  way  of  knowing'.  I  believe  we  would  find 
billings  tieing;  down  $50,000.  We  have  $25,000  over  this  period  of  time; 
probably  in  equal  amounts  within  this  framework  within  1  month 
after  T  would  show  a  deposit,  I  mean,  make  a  payment  to  them. 

Mr,  Weitz,  Off  the  record  a  minute, 

[Discussion  off  the  record.] 

Mr.  Weitz.  Rack  on  the  record. 

All  rig:ht.  At  this  point,  we  are  looking  at  what  I  shall  mark  as 
exhibit  12,  the  check  of  Se]:>tember  1,  1970,  for  $22,000  for  Jacobsen 
and  Long  for  an  invoice  dated  August  31,  1970,  which  has  an  $8,000. 
a  $12,000,  and  a  $2,000  item. 

[Whereupon  the  documents  referred  to  were  marked  Lilly  exhibit 
No.  12  for  identification.*] 

Now,  your  best  recollection,  or  your  assumption  is,  that  the  $8,000 
and  the  $12,000  were  the  $20,000  to  repay  you  for  the  earlier 

Mr.  Lflly.  For  Aug-ust  6, 1970. 

Mr.  Weitz  [continuing],  $10,000  payments  on  Augfust  6, 1970. 

Mr.  Lilly.  Tliat's  right. 

Mr.  Weitz.  Your  best  recollection  is  they  would  try  to  recoup  the 
money  in  round  amounts  shortly  after  making  the  payment  to  you. 
Is  that  the  practice  ? 

Mr.  Lilly.  That  is  the  practice  they  used. 

Mr.  Weitz.  Do  you  know  whether  they  were  ever  short  in  the 
amounts  of  money  that  they  recouped  in  terms  of  their  excess  ttixes  ? 

Mr.  Lilly.  If  so,  I  am  not  aware  of  it. 

Mr.  Weitz.  All  right.  Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Weitz.  Back  on  the  record, 

Mr.  Sanders.  Just  one  other  question.  Did  you  receive  any  other 
moneys  from  Jacobsen  and  Long  for  political  purposes  which  you  did 
not  use  to  pay  off  your  loans  at  the  bank  ? 

Mr.  Lilly.  No,  T  did  not. 

Mr.  Sanders.  That's  all. 

Mr.  Weitz.  Before  we  leave  Jacobsen  and  Long,  let  me  ask  you  a 
question  with  regard  to  the  original  payments  in  December.  Did  you 
contact  them  or  did  Mr.  Nelson  contact  them  in  regard  to  repayment? 

Mr.  Ln.LY.  Do  you  mean  Jacobsen  and  Long? 

Mr.  Weitz.  Yes. 

Mr.  Lilly.  I  am  sure  Mr.  Nelson  talked  with  them.  T  also  talked 
with  them,  but  I  am  sure  that  he  talked  with  them.  I  do  not  rememVjer 
the  conversation. 

Mr.  Weitz.  Do  you  know  whether,  either  you  told  them,  or  from 
some  other  source  they  understood  the  payments  to  you  in  December 
to  have  been  to  help  you  repay  n  longstanding  loan,  as  opposed  to  one 
that  was  immediately  taken  out  in  December? 

•See  p.  6012. 


5941 

Mr.  Lilly.  Would  you  repeat  that  ? 

Mr.  Weitz.  I  aui  sorry. 

When  they  made  the  payment  to  you  in  December  of  1969,  did  you 
have  any  conversation  with  them  tliat  indicated  to  you  that  their  belief 
was  that  they  were  helping  you  pay  off  a  loan  that  was  overdue  from 
a  previous  period  ? 

Mr.  Lilly.  No. 

Mr.  Weitz.  Was  it  your  understanding;  that  they  knew  that  they 
were  helping  you  repay  a  loan  that  had  just  been  taken  out  ? 

Mr.  Lilly.  I  am  not  sure  that  they  were  totally  aware  that  I  was 
paying  on  a  loan  just  taken  out,  but  again  being  officers  of  the  bank, 
I  feel  sure  that  they  would  have  knowledge  of  a  $100,000  loan  close  to 
that  period  of  time.  And  I  am  more  inclined  to  think,  even  though  it  is 
not  personal  knowledge,  that  it  would  apply  on  this  particular  loan. 

As  a  matter  of  fact  in  the  bank,  to  go  back  beyond  that,  I  believe 
you  will  find  that  I  have  no  record  of  having  borrowed  any  money 
from  that  particular  bank.  Of  course,  that  would  not  mean  that  I  could 
not  have  borrowed  it  from  another  bank,  but  this  particular  one. 

]\Ir.  Wkitz.  And  you  say  that  at  least  several  times  when  you  talked 
with  them,  you  would  tell  them  that  you  needed  money  for  political 
purposes? 

]\Ir.  T.,iLLY.  Yes. 

]Mr.  AVeitz.  In  fact,  of  course,  except  for  the  one  $5,000  payment 
on  June  15,  which  also  went  onto  youi-  notes,  actually  all  the  payments 
you  received  from  them  went  to  repay  existing  loans? 

:Mr.  Ltlly.  That  is  right.  That  is  true." 

Mr.  Weitz.  So  it  is  lilcely  you  have  said  you  need  money  for  politi- 
cal purposes,  or  is  it  likely  that  you  said  to  pay  off  some  loans  I  have? 

Mr.  Lilly.  I  i)robably  would  not  have  distinguished  between  the 
two  of  them  in  my  conver-sations  with  them.  And  as  T  remember, 
I  needed  some  money  for  a  political  contribution. 

Mr.  Weitz.  AATiether  or  not  it  was  actually  to  repay  a  loan  that 
you  would  have  made  to  make  that  contribution,  or  to  make  the 
conti-ibution  directly? 

:Mi'.  Lilly.  Yes. 

]Mr.  Weitz.  I  see. 

Mr.  XiciiOLAs.  On  tliat  point,  and  on  the  i)oint  that  the  other  ques- 
tion that  was  asked  concerning  the — all  of  these  moneys  that  you 
received  from  pTacobsen  and  Long  apply  to  payments  of  notes  only 
in  relation  to  that  aspect  of  it  ? 

^Ir.  Lilly.  Yes. 

Mr.  Nicholas.  Wait  a  minute.  Let  me  finish. 

Mr.  Lilly.  All  right. 

Mr.  Nicholas.  Do  you  recall  whether  or  not  thei-e  wei-e  any  dii-ect 
conti'ibutions  that  you  made  fi-om  Jacobsen  and  Long  nxmey,  like— 
I  know  that  we  are  not  talking  about— it  deviates  a  little  bit;  for 
instance,  like  in  a  State  campaign  like  the  Bill  Barnes  or  Gus  Mut- 
schei-  or  to  Governoi-  Smith,  or  lo  anv  of  these  ])eo])l('  that  vou  know 
well. 

Do  you  understand  what  I  moan  from  political  circles? 

Mr,  Ltliy'.  Yes. 

Mr.  Nicholas.  Did  you  ever  give  those  people  moneys  from  Jake 
and  Joe  that  were  i-ecouped  by  them  billing  AMPI?  This  is  impor- 
tant because  they  have  asked  you  a  question. 


5942 

Did  all  of  the  money  that  they  billed  A^IPI  go  only  to  pay  these 
notes  ?  You  have  to  understand  that — — 

Mr.  Lilly,  Let  nie  reanswer  the  question  because  on  the  face  of 
this,  I  have  other  contributions. 

Mr.  Nicholas.  I  noticed  those  on  there.  You've  ^ot  all  kinds  of 
State  things. 

Mr.  Lilly.  They  are  State.  They  are  all  State. 

Mr.  Weitz.  You're  talking;  about  on  page  2  of  exhibit  6? 

Mr.  Lilly.  See  over  on  this  side,  the  Speaker  of  the  House,  Gus 
Mutscher,  $200,  unidentified — Speaker  of  the  House,  Gus  ]Mutscher. 
Then  you  pick  up  a  Federal  contribution,  $1,200  to  Beall ;  $1,000  to 
Gus  Mutscher;  $300  unidentified;  $4,100  to  Gleason,  question  mark, 
and  then  of  course,  Lt.  Gov.  Ben  Barnes,  and  then  the  House,  the 
State  of  Texas,  two  other  State  representatives 

Mr.  Weitz.  Where  did  that  cash  come  from  ? 

Mr.  Lilly.  It  came  out  of  this  account,  so  it  created — and  some  of 
that  money  could  have  gone  into  these  particular  items.  An  example, 
the  $5,000  that  was  deposited  in  Jmie  of  1970  of  Jacobsen  and  Long 
could  easily,  quite  easily,  have  gone  to  some  of  these  other  political 
contributions. 

Mr.  Weitz.  But  the  others  are  noted,  at  least  in  your  exhibit,  as 
cash  payments  on  the  notes. 

Mr.  Lilly.  Having  been  applied  on  the  notes. 

Mr.  Weitz.  So  if  that  is  true,  it  might  only  be  true  of  the  June  15, 
1970,  payment,  at  least  for  Jacobsen  and  Long? 

Mr.  Lilly.  It  could  be,  yes, 

Mr.  Nicholas.  So  the  record  could  be  clear,  Alan,  the  reason  I  am 
asking  this  question  is  because  going  back  in  memory  on  prior  dis- 
cussions of  these  notes  that  we  all  know  about,  that  were  taken  out 
at  Citizens'  National  Bank ;  the  reason  I  am  asking  Bob  the  question 
is  because  most  of  the  payments  on  those  notes,  as  I  recall,  have  been 
traced  to  Stuart  Russell  money.  Is  this  not  correct  ? 

Mr.  Lilly.  That's  right. 

Mr.  Nicholas.  Almost  $75,800  worth  of  them  or  more. 

Mr.  Weitz.  Some  of  what  money  ?  I  am  sorry. 

Mr.  Nicholas.  Stuart  Russell  money  to  Bob  Lilly. 

Mr.  Wetfz.  We'll  get  to  Russell. 

Mr.  Nicholas.  That's  the  reason  I'm  asking  this  question,  because 
when  vou  asked  him  a  specific  raiestion — were  all  of  these  moneys 
that  Jacobsen  and  I^ong  billed  AMPI  for,  considered  a  scheme,  a  part 
of  the  billing  to  pav  back  tlie  moneys  they  had  theretofore  contributed 
to  Lilly  to  make  contributions  with. 

I  am  asking  you  to  think  asrain  and  be  as  sure  as  you  can  as  to 
whether  or  not  they  all  went  to  the  payment  of  notes  or  not. 

IMr.  Lilly.  Of  course,  some  of  those  monevs  could  have  been  used 
on  political  contributions  within  the  State  of  Texas,  or  to  other  Fed- 
eral elections,  or  Federal  candidates;  outside  of  going  directly  on  the 
note,  because  when  I  have  identified  a  good  portion  of  them  having 
been  paid.  I  would  have  to  have  an  accountant  to  interpret  tliis  for  me. 

But  T  would  sav  some  of  them  certainly  could  have  gone  in. 

Mr.  Weitz.  Talking  about  Jacobsen  and  Long,  the  only  $5,000 

Mr.  Lilly.  Tliat  could  be  true. 

Mr.  Weitz.  I  understand.  Let's  move  to  Ted  Van  Dvk. 


5943 

Mr.  Lilly.  All  right. 

Mr.  Weitz.  His  name  appears  on  the  list  of  conduits.  Would  you  tell 
me  what  you  remember  to  have  transpired  after  the  loan  was  taken 
out  with  regard  to  repayments  to  you  by  Mr.  Van  Dyk  ? 

Mr.  Lilly.  Yes ;  Mr.  Van  Dyk  was  one  of  the  attorneys. 

Mr.  Weitz.  I  believe  he  is  not  an  attorney. 

Mr.  Lilly.  Well,  one  of  the  people  involved  in  paying  back  on  this 
scheme.  In  the  latter  part  of  December,  he  sent  a  check  to  me  for 
$10,000,  and  the  check  was  apparently  deposited  in  the  Citizens'  Na- 
tional Bank,  according  to  my  records,  on  January  5,  1970. 

And  then  in  March  of  1970, 1  filed  my  income  tax,  and  then  in  March, 
later  in  March,  I  received  a  letter  from  Mr.  Ted  Van  Dyk  as  well  as  a 
1099,  where  Mr.  Van  Dyk  stated— the  letter  was  dated  March  10,  1970, 
to  me.  He  said,  "As  protection  for  both  of  us,  you  will  be  receiving  a 
withholding  slip  for  the  $10,000,  just  as  I  received  one.  That  closes  the 
circles  and  keeps  us  beyond  question." 

Mr.  Nicholas.  Maybe  I  gave  you  the  wrong  one. 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Weitz.  Back  on  the  record. 

Mr.  Lilly,  let  us  go  back  to  December.  When  did  you  receive — De- 
cember of  1969  or  January  of  1970.  TVTien  did  you  receive  the  $10,000 
payment  from  Mr.  Van  Dyk  ? 

Mr.  Lilly.  I  deposited  the  payment  on  January  5, 1970. 

Mr.  Weitz.  So  you  would  have  received  it  sometime  just  before 
that? 

Mr.  Lilly.  January  2  or  3,  just  prior  to  that  time. 

Mr.  Weitz.  Do  you  know  who  contacted  Mr.  Van  Dyk  to  ask  for  that 
payment  ? 

Mr.  Lilly.  After  that? 

Mr.  Weitz.  No  ;  asked  for  that  payment. 

Mr.  Lilly.  Oh,  asked  for  the  payment.  According  to  the  prior  notes 
that  I  have,  DeVier  Pierson  would  have  contacted  Mr.  Van  Dyk. 

Mr.  Weitz.  Yoii  don't  remember  contacting  him  ? 

Mr.  Lilly.  No. 

Mr.  Weitz.  Do  you  remember  talking  to  him  at  all  before  receiving 
that  payment  ? 

Mr.  Lilly.  Not  about  the  payment.  I  talked  quite  often  with  Ted 
Van  Dyk  on  other  political  things,  but  not  about  the  payback,  the 
check ;  no. 

Mr.  Weitz.  Now,  when  the — I  have  and  I  want  to  mark  for  exhibit 
13,  a  series  of  documents  relating  to  the  invoice  and , payment  in  De- 
cember to  Mr.  Van  Dyk  in  the  amount  of  $18,050  on  or  about  December 
22,19(59. 

["\^niereupon,  the  documents  referred  to  were  marked  Lilly  exhibit 
No.  13  for  identification.*] 

Mr.  Weitz.  Do  you  remember  being  asked  about,  or  in  some  way 
being  involved  in  the  approval  of  that  invoice  from  Mr.  Van  Dyk? 

Mr.  Lilly.  I  think  that  Mr.  Tsham  might  have  checked  with  me  had 
T  received — was  T  aware  of  the  billing.  I  am  not  sure  if  I  initialed 
the  billing  or  not,  but  Mr.  Tsham  would  have  checked  with  me  to  see 
if  T  had  received  any  money  from  Mr.  Van  Dyk. 

*  See  p.  6015. 


5944 

Mr.  Weitz.  One  of  the  documents  in  exhibit  13  is  a  letter  dated 
December  '22  from  Mr.  Van  Dyk.  It  sajs  "Dear  Plarold,''  to  Mr.  Harold 
Nelson.  And  he  refers — this  is  the  letter  apparently  sending  the  in- 
voice to  AMPI. 

And  the  letter  reads:  "Per  my  discussion  today  with  Bob  Lilly, 
I  am  submitting  the  enclosed  invoice."  Do  you  recall  discussing  with 
him  some  matter  relating  to  submitting  an  invoice  to  recoup  ttie 
$10,000  payment? 

Mr.  Lilly.  No;  I  do  not  recall  it.  I  would  not  say  that  I  had  not, 
but  I  certainly  do  not  remember  it. 

Mr.  Weitz.  You  do  not  remember  yourself  discussing  this  type  of 
matter  before  receiving  the  check  from  Mr.  Van  Dyk  ? 

Mr.  Lilly.  No  ;  I  do  not. 

Mr  Weitz.  Now,  marked  as  exhibit  14,  is  a  check,  a  Xerox  copy  of 
both  the  front  and  the  back  of  a  check  to  Bob  A.  Lilly,  signed  by  Ted 
Van  Dyk  in  the  amount  of  $10,000,  dated  December  29,  1969.  xVnd  it 
is  endorsed  for  deposit  only,  Bob  A.  Lilly.  Have  you  ever  seen  that 
check  ? 

Mr.  Lilly.  Yes;  I  have  seen  it,  and  that  is  my  endorsement  on  the 
check. 

[Whereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No,  14  for  identification.^] 

Mr.  Weitz.  Now,  after  receiving  this  check,  when  was  the  next  time 
that  you  talked  to  Mr.  Van  Dyk  about  this  matter,  about  this  trans- 
action V 

Mr.  Lilly.  I  do  not  remember  hnving  talked  with  him.  It  is  quite 
possible,  but  the  next  time  I  remember  is  having  received  a  letter  from 
Mr.  Van  Dyk  on  or  about  March  10, 1970. 

Mr.  Weitz.  Which  is  the  letter  you  just  read  into  the  rpcord. 

Mr.  Lilly.  Eight. 

Mr,  Weitz.  Do  vou  know  whether  Mr.  Van  Dyk  knew  the  purpose 
of  the  first  $10,000  transaction  ? 

Mr.  Lilly.  No.  I  did  not  talk  with  Ted  Van  Dyk  on  this,  and  I 
would  have  to  say  that  evidentally  from  the  letter,  I  had  a  conversation 
with  him,  but  I  am  not  aware  of  the  conversation.  I  do  not  remember  it 
with  him.  And  I  do  not  remember  discussing  the  purpose  of  it,  or  any- 
thing else. 

I  knew  he  was  one  of  the  people  to  make  a  contribution  to  pay  this 
back. 

Mr.  Weitz.  Let  me  mark  as  exhibit  15,  a  letter  dated  "March  10, 1970, 
from  Ted  Van  Dyk  to  you,  which  you  read  into  the  record  just  a 
moment  ago. 

[Whereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No.  15  for  identification.^"! 

Mr.  Weitz.  T  take  it  that  you  have  seen  that  letter,  and  that  is  the 
letter  you  received  from  Mr.  Van  Dyk? 

Mr.  Lilly.  Yes,  I  have. 

Mr.  Weh'z.  And  accompanying  that  letter  was  the  form  1099  ? 

Mr.  Lilly.  That  is  right. 

Mr.  Weitz.  Yes. 

And  subsequently,  you  filed  an  amended  return  to  reflect  that  in- 
creased $10,000  payment? 

iSpep.  6018. 
2  Sep  p.  eoifl. 


5945 

Mr.  Lilly.  True. 

Mr.  Weitz.  And  this  is  a  copy  of  that  amended  return  ? 

Mr.  Lilly.  Yes, 

Mr.  Weitz.  Which  you  provided  to  us  ? 

Mr.  Lilly.  [Nods  affirmatively.] 

Mr.  Weitz.  At  the  time  you  received  this  letter  from  Mr.  Van  Dyk 
and  the  form  1099,  what  did  you  do  ?  Who  did  you  talk  to  ? 

Mr.  Lilly.  I  talked  to  Bob  Isham  in  regard  to  this,  and  told  him 
that  Mr,  Van  Dyk  has  sent  me  a  1099,  knowing  that  he  had  been  paid 
in  excess  of  $18,000,  that  he  had  billed  us  for  a  $10,000  check,  and 
that  I  would  be  placed  in  the  position  of  filing  an  amended  report,  ^ 

And  I  think  at  the  time,  and  I  cannot  tell,  I  have  no  record  of  it,  but 
if  my  memory  serves  me  correctly,  I  think  that  INIr,  Isham  gave  me  an 
advance  check  to  pay  the  income  tax.  But  I  would  not  laiow  this, 
whether  he  did  or  not.  And  I  suppose  AMPI  records  might  reflect  this. 
Maybe  this  was  one  of  those  that  I  never  recovered ;  and  if  I  did  not, 
and  paid  it  myself.  I  do  not  really  know. 

Mr.  Weitz.  Now,  if  Isham  had  given  you  an  AMPI  check,  how 
would  you  have  recovered  it  ?  Through  an  expense  voucher  at  a  later 
time? 

Mr.  Lilly,  Yes,  through  an  expense  voucher.  It  might  have  been  an 
expense  advance,  expense  voucher  to  me, 

Mr,  Weitz,  What  were  the  excess  taxes  ?  Do  you  recall  ? 

Mr,  Ln.LY,  Approximately  $4,000, 

Mr,  Weitz,  Did  anyone  call  Mr.  Van  Dyk  and  talk  to  him  about 
this? 

Mr,  Lilly,  I  do  not  know  if  Mr,  Isham  called  him  or  not. 

Mr,  Weitz,  Do  you  recall  whether  Mr,  Isham  suggested  that  you 
just  ignore  it  and  not  do  anything  further  to  your  re^turn? 

Mr,  Lilly,  No,  I  do  not  recall  that, 

Mr,  Weitz,  But  you  felt  certain  that  you  had  to  file  an.  tlhended 
return  to  reflect  this  additional  payment  ? 

Mr.  Lilly,  Yes,  I  did, 

Mr,  Weitz,  And  you  did  so  ? 

Mr,  Lilly,  Right. 

Mr.  Weitz.  Do  you  recall  any  further  payments  or  transactions 
with  Mr.  Van  Dyk  in  this  vain  ? 

Mr.  Lilly.  No.  In  the  name — there  was  a  check  on  or  about  Au- 
gust 27.  1970,  September  15,  1970,  that  had  the  name  Kirby  Jones, 
Riggs  National  Bank,  Washington,  D.C. ;  and  it  showed  up  as  having 
been  deposited  on  December  15. 1970,  under  that  name. 

And  this  apparently  came  from  Mr,  Van  Dyk.  I  do  not  know  Mr. 
Kirby  Jones. 

Mr.  Weitz.  Let's  back  up  a  minute. 

Do  you  recall  whether  you  or  anyone  else  contacted  Mr.  Van  Dyk 
in  advance  of  September  15  to  request  anv  such  payment? 

Mr.  Lilly.  I  certainlv  have  no  memory  of  having  contacted  him,  but 
it  is  possible  that  I  could  have. 

Mr.  Weitz.  Do  vou  ha^e  anv  independent  recollection,  or  hate  it  been 
refreshed,  as  to  what  you  did  with  the  $10,000  pavment  from  Mr. 
Jones  ? 

Mr.  Lilly.  I  hnve  refreshed  mv  memorv.  It  did  qro  into  an  account 
in  Austin,  Tex.,  into  the  wrong  account,  at  about  September  15,  and 


5946 

about  a  day  or  two  later  was  redeposited  in  the  Citizens',  the  other 
Bob  A.  Lilly  account,  which  v/as  not  a  personal  account. 

Mr.  Weitz.  Was  this  deposited  erroneously  as  had  been  those  earlier 
checks  from  Jacobsen  and  Long  ? 

Mr.  Lilly.  Only  in  the  Citizens'  National  Bank,  and  not  the  First 
National  Bank. 

Mr.  Weitz.  But  it  was  you  who  deposited  them,  and  switched  them 
over  sometime  later? 

Mr,  Lilly.  A  couple  of  days  later ;  the  check  was  written  on  the  fTth. 

Mr.  Weitz.  And  was  the  money  used  for  any  particular  purpose, 
such  as  paying  off  existing  notes  ? 

Mr.  Lilly.  I  would  assume  from  my  notes  on  disbursements  to  Citi- 
zens' National  Bank  on  September  17,  1970,  tc  receive  payment  of 
$15,000  on  an  existing  note  or  notes.  And  I  would  say  that  the  $10,000 
we  are  referring  to  is  reflected  within  that  $15,000  payment. 

Mr.  Weitz.  Now,  I  marked  for  identification  exhibit  16,  which  is  a 
check  from  AMPI  to  Ted  Van  Dyk  x\ssociates  on  September  4,  1970, 
for  $19,055.72!.  Attached  to  that  voucher  is  an  invoice  dated  August  28, 
1970,  to  AMPI  from  Ted  Van  Dyk  Associates,  which  includes  a  direct 
expense  July-August  1970  of  $12,057;  at  the  top  of  that  is  written 
circled,  "OK,  K.B."  And  then  it  goes  on  "September  2, 1970,  as  per  in- 
structions from  Bob  Lilly  on  telephone  this  date." 

[Whereupon,  the  documents  referred  to  were  marked  Lilly  exhibit 
No.  16  for  identification.*] 

Mr.  Weitz.  Now,  would  you  look  at  that  first  and  tell  me  whether 
you  can  identify  it,  and  then  tell  me  whether  you  can  explain  that 
handwritten  notation. 

Mr.  Lilly.  The  notation  at  the  top  was  written  by  my  secretary, 
Sarah  Bezdek.  She  used  the  name  Katherine  Bezdek  in  all  of  her  let- 
ters, and  this  is  her,  I  would  take  it.  It  appears  to  be  her  writing.  And 
apparen*^^,:!  instructed  her  to  OK  the  bill  for  payment  to  Ted  Van 
Dyk  from  some  place.  Apparently,  I  was  not  in  San  Antonio. 

Mr.  Weitz.  But  that  does  not  refresh  your  recollection  as  having 
been  personally  involved  in  the  arranging  or  asking  for  the 
$10,000  from  Van  Dyk  or  approving,  or  telling  him  to  bill  the  com- 
pany direx?tly? 

Mr.  Lilly.  I  really  do  not  recall  the  conversation.  I  mean,  I  could 
have  had  a  conversation  with  him. 

Mr.  Weitz.  Do  you  remember  whether  Bob  Justice  was  either  in- 
volved in  this  transaction,  or  do  you  know  of  any  other  transaction 
which  he  might  have  been  involved  in  picking  up  money  from  Mr. 
Van  Dyk? 

Mr.  Lilly.  I  was  not  aware  that  Bob  Justice  picked  up  any  money 
from  Van  Dyk. 

Mr.  Weitz.  You  had  never  heard  that? 

Mr.  Lilly.  No  ;  I  was  aware  of  other  parties,  but  not  Ted  Van  Dyk. 

Mr.  Weitz.  Now,  on  the  third  page  of  the  exhibit,  there  is  a  letter 
from  Ted  Van  Dyk,  apparently  sending  the  invoice,  also  dated  Au- 
gust 27, 1970.  And  it  says,  "Dear  Bob,  per  our  discussion  earlier  today, 
please  see  the  attached  invoice  for  processing.  See  you  in  Washington 
on  the  10th,  or  thereabouts.  Sincerely." 

*See  p   6021. 


5947 

Again,  w^ould  you  look  at  that,  and  see  if  you  have  ever  seen  that? 
Again,  think  back  and  see  if  you  can  recall  any  conversation  about- 
this. 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Weitz.  Back  on  the  record. 

As  I  just  asked  you,  does  this  reflect  your  recollection,  or  were  there 
times  when,  for  example,  there  were  other  bills  when  this  might  ap- 
pear, and  you  in  fact  did  not  talk  with  Mr.  Van  Dyk? 

Mr.  Lilly.  There  are  other  bills  and  other  times  when  Mr.  Van 
Dyk  would  write  me  letters,  and  indicate  "as  per  our  conversation,"  on 
a  certain  day ;  he  is  sending  me  a  billing  or  he  had  taken  certain  action 
as  per  my  instructions,  when  in  fact,  I  iiad  had  no  conversation  witli 
him.  And  I  do  not  recall  this  particular  conversation,  or  the  letter 
but 

Mr.  Weitz.  Do  you  have  any  idea  who  would  have  talked  with  him  ? 
Obviously,  this  would  not  have  been  spontaneous. 

Mr.  Lilly.  Bob  Isham  had  conversations  with  him,  but  very  little 
on  this  particular  thing.  Dave  Parr  had  more  conversation  with  Van 
Dyk  than  anyone  else.  Mr.  Nelson  also  had  conversation  with  him. 

They  had  much  closer  contact.  My  contact  with  Ted  Van  Dyk  was 
never  that  close. 

Mr.  Weitz.  Let  me  just  ask  you  one  more  time.  Do  you  ever  recall, 
for  example,  talking  to  Isham  about  some  incident  of  Bob  Justice, 
or  anyone  else  connected  with  Parr,  going  to  Ted  Van  Dyk's  office  and 
picking  up  money  from  him  or  asking  him  for  money  ? 

Mr.  Lilly.  I  do  not  recall  Ted  Van  Dyk — I  do  know  I  talked  to  Bob 
Lsham  about  Bob  Justice  having  gone  to  Cliff  Carter's  office  and  Dick 
Maquire's  office  in  Washington,  D.C..  to  pick  up  some  money. 

Mr,  Sanders.  With  respect  to  Van  Dyk,  did  he  have  some  involve- 
ment, to  your  knowledge,  in  the  contributions  being  made  to  the  Mus- 
kie  campaign? 

Mr.  Lilly.  I  believe  the  contributions  I  have  referred  to.  and  I  have 
some  correspondence  on  it,  went  back  to  his  election  in  1970  when  he 
was  seeking  reelection  as  a  Senator  from  the  State  of  Maine.  And  Mr. 
Russell  did  make  some  contributions  to  him. 

Mr.  Sanders.  Do  you  have  knowledge  that  the  Kusscll  contributions 
were  anything  other  than  from  Russell's  own  genuine  resources  ?  What 
I  am  saying  is,  do  you  have  knowledge  that  Russell,  in  any  way,  was 
reimbursed  by  AMPT  or  MPI  ? 

Mr.  Lilly.  I  would  liave  to  check  billings  to  see  if  he  was  reimbursed. 
But  I  have 

Mr.  Sanders.  Before  we  get  into  Russell,  what  was  the — I  thought 
this  had  some  relationship  to  Ted  Van  Dyk.  Does  it  ? 

Mr.  Lilly.  It  has  a  relationship  to  Ted  Van  Dyk,  because  Ted  Van 
Dyk 

Mr.  Weitz.  Wliy  don't  we  go  off  the  record  a  minute  ? 

[Discussion  off  the  record.] 

Mr.  Sanders.  Back  on  the  record. 

We  have  been  talking  about  Ted  Van  Dvk,  and  I  have  an  interest 
in  whether  or  not,  to  your  knowledge,  Ted  Van  Dyk  ever  received  any 
funds  for  the  Muskie  Presidential  campaign,  which  might  haA^e  origi- 


5948 

nated  with  AMPI  or  whether  he  liad  involvement  in  procuring  any 
such  funds? 

Mr.  Lilly.  Yes,  I  do  have  some  knowledge  in  the  form  of  memos,  and 
some  in  the  form  of  letters  from  Ted  Van  Dyk,  some  to  Ted  Van  Dyk, 
Milt  Semer  also.  And  it  might  be  easier  if  I  would  read  a  memo  that 
I  used. 

Mr.  Sanders.  Perhaps  if  we  could  just  make  a  Xerox  of  that,- we 
could  set  this  aside  here  with  others  that  we  might  accumulate,  and  I 
will  bring  my  secretary  down  here  to  Xerox  those  while  we  continue. 

And  rather  than  taking  the  time  to  read  that  whole  thing  in  the 
record,  let's  mark  it  for  the  next  numbered  exhibit.  Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Sanders.  Back  on  the  record. 

Now,  can  you — from  your  best  recollection,  can  you  state  the  thrust 
of  exhibit  17? 

[Whereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No.  17  for  ielentification.*] 

Mr.  Lilly.  It  is  a  memo  of  notes  that  I  have  accumulated  and  reduced 
to  t^^-ping,  apparently  to  keep  myself  advised,  and  it  was  written  on 
April  17,  1970,  and  it  pertained  to  a  conversation  with  Milt  Semer 
having  received  a  check  from  Ted  Van  Dyk  as  a  contribution  to 
Muskie,  a  $5,000  check. 

And  he  was  quite  amazed,  Mr.  Semer  was,  that  Van  Dyk  would  be 
involved  in  the  campaign  of  Muskie.  Muskie  was  seeking  reelection  as 
a  Senator  at  the  time  from  the  State  of  Maine.  And  I  was  totally 
unaware  of  the  total  impact  of  it. 

I  did  not  know.  I  knew  Milt  Semer  was  closely  related  to  Senator 
Muskie,  but  Ted  Van  Dyk;  I  did  not  tie  that  closely.  But  in  the 
conversation,  and  in  the  memo  that  I  made  following  that  conversation, 
I  mentioned  the  fact  that  apparently  Semer  was  getting  ready  for  the 
1972  campaign,  because  he  did  refer  to  a  Mr.  Martin  Hauhn,  H-a-u-h-n, 
in  Oklahoma,  and  wanted  me  to  check  him  out  to  see  who  he  is,  what 
he  is,  what  ability  he  has,  apparently  for  the  1972  campaign. 

Mr.  Sanders.  In  1972,  did  you  have  any  conversation  with  Van  Dyk 
about  funds  for  Muskie  ? 

Mr.  Lilly.  No  ;  I  have  some  memos  from  Van  Dyk  that  crossed  my 
desk.  Apparently  some  of  them  were  written  to  me  directly.  'He  is  refer- 
ring to  some  things  that  I  am  totally  unaware  of. 

Mr.  Sanders.  Did  any  of  them  make  mention  of  any  desire  for  funds 
for  Muskie? 

Mr.  Lilly.  They  referred  to  funds  for  Muskie.  I  have  one  on  Sep- 
tember 14,  where  he  is  referring  to  a  check  for  $1,000  to  Maine  for 
Muskie,  September  14,  1970 — and  he  said  it  should  be  torn  up  and  it 
was  going  to  be  replaced. 

Well,  I  do  not  know — I  am  not  advised  at  all — the  Wliittemore 
check  is  all  he  referred  to. 

Mr.  Sanders.  Do  you  have  other  correspondence  from  Van  Dyk 
pertaining  to  contributions  for  Muskie  ? 

Mr.  Lilly.  I  have  anotlier  one  here,  dated  .July  9,  1970.  And  this  is 
from  Ted  Van  Dyk  to  Don  Nicoll,  N-i-c-o-1-1,  1660  L  Street  NW., 
room  1004,  Washington,  D.C.  And  I  am  not  aware  of  who  Mr,  Don 
Nicoll  might  be. 

♦See  p.  6024. 


5949 

But  it  refers  here  to  a  memo.  It  says,  "see  attached  a  check  for  $1,666 
to  each  Muskie  Election  Committee.'" 
Mr.  Nicholas.  Read  the  whole  thing. 
Mr.  Lilly.  Back  up  and  start  over. 

Dear  Don,  Harold  Nelson,  Dave  Parr  and  their  collea^es  had  a  good  meeting 
yesterday  with  the  Senator.  Many  thanks. 

Here  is  the  follow-up :  please  see  attached  two  cheeks  $1,666  each  for  the 
Muskie  Election  Committee.  And  one  for  the  Maine  for  Muskie  Committee,  addi- 
tional checks  for  $3,334  each  will  be  sent  to  you  within  the  next  few  days  to 
reach  a  total  of  $5,000  for  each  committee. 

Two.  I  will  send  you  a  memorandum  and  list  reference  to  the  special  milk 
program.  The  Senator  offered  to  help  on  this. 

Three.  I  will  look  forward  to  receiving  from  you  a  list  of  candidates  the 
Senator  recommends  for  special  help  this  fall.  Contributions  will  be  made  to 
them  on  the  basis  of  the  contributions  that've  come  to  the  Senator's  recommenda- 
tion. I  suggest  that  the  list  be  relatively  short,  but  consist  of  people  who  are  of 
high  priority  to  you. 

Four.  The  Senator  said  he  would  welcome  the  input  of  several  academics 
who  have  some  help  to  offer  re :  agricultural  policy.  I  will  see  that  their  papers, 
etc.,  are  channeled  through  you.  You  can  judge  their  usefulness. 

Five.  Small  favors  department :  Dave  Parr  has  two  sons,  Travis  and  Steve, 
age  18  and  17,  who  are  anxious  to  spend  2  or  3  days  this  summer  carrying  bags, 
driving  cars,  etc.  in  the  Senator's  campaign  entourage  in  Maine.  They  are  good 
looking,  intelligent  boys.  They  would,  of  course,  travel  and  work  at  their  own 
expense.  Could  this  be  arranged? 

I  will  stay  in  touch  on  all  of  this.  With  best  wishes,  Sincerely,  Ted  Van  Dyk. 

Here  are  copies  of  the  checks,  Xeroxed  copies  of  tlie  checks  that  he 
refers  to  from  SPACE,  which  is  the  political  arm  of  Dair5^men,  Inc. 
located  with  headquarters  in  Louisville,  Ky. 

Mr.  Sanders.  This  is  the  letter  that  you  have  just  read  from  Ted 
Van  Dyk  to  Mr.  Don  Nicoll  ? 

Mr.  Lilly.  Right. 

Mr.  Sanders.  Did  you  say — you  are  not  sure  who  he  is  or  where  he 
fits  in? 

Mr.  LiiJLY.  I  have  no  idea.  I  do  not  know  why  I  have  a  copy  of  the 
letter,  or  why  I  am  into  it,  but  it  was  sent  to  me.  This  is  the  reason  I 
have  a  copy. 

Mr.  Sanders.  This  handwriting  up  in  the  upper  lefthand  corner, 
"file  with  Van  Dyk  letter.''  Is  that  your  handwriting? 

Mr.  Lilly.  That  is  my  handwriting. 

Mr.  Sanders.  You  have  no  idea  who  sent  this  to  you  ? 

Mr.  Lilly.  [Nods  negatively.] 

Mr.  Sanders.  Did  you  take  any  action  on  the  basis  of  this  Van  Dyk 
letter  to  Dan  Nicoll  ?' 

Mr.  Lilly.  Not  that  I  know  of,  because  apparently  I  have  been  kept 
informed  about  some  transaction,  and  Mr.  Van  Dyk  must  have  felt 
compelled  to  send  me  a  copy  of  it. 

Mr.  Sanders.  Oh,  you  think  it  is  likely  that  you  received  that,  a 
copy  of  that,  from  Van  Dyk  ? 

Mr.  LiLLi .  Well,  if  not  from  Van  Dyk,  I  don't — ^IVIilt  Semer  pos- 
sibly, but  I  do  not  see  his  name  mentioned  in  it,  and  then  Don  Nicoll — 
or  Nicoll,  however  the  name  is  pronounced — I  cannot  think  of  who  he 
is.  And  I  don't  know  why  he  would  have  been  sending  me  something. 

Mr.  Nicholas.  May  T  ask  one  question  on  this  ? 

Mr.  Lilly,  does  the  fact  that  the  two  checks  that  are  attached  to  the 
Van  Dyk  letter  of  July  9,  1970,  are  from  the  SPACE,  which  is  the 
Special  Political  Agricultural  Community  Education;  would  there 


5950 

have  been  a  policy  set  up  between  TAPE  and/or  AMPI  or  MPI  and 
SPACE  to  keep  you  informed  as  to  what  they  were  doing? 

Mr.  Lilly.  No. 

Mr.  Nicholas.  No? 

Mr.  Lilly.  To  my  knowledge. 

Mr.  Nicholas.  Bear  in  mind  that  he  was  treasurer  of  the  TAPE 
committee. 

Mr.  Lilly.  No;  not  in  1970.  Bob  Isham  was  a  trustee  of  TAPE, 
and  it  might  have  been  someone's  effort  to  keep  me  informed,  but  to 
my  knowledge,  these  are  the  only  two  checks  that  I  have  from  SPACE 
in  my  file. 

Mr.  Weitz.  If  I  may  ask  a  question.  Is  it  possible  that  Dave  Parr 
sent  you  a  copy,  since  his  name  is  included  in  there  ? 

Mr.  Lilly.  Well,  his  name  was  mentioned. 

Mr.  Weitz.  No.  5  in  the  "small  favors  department." 

Mr.  Lilly.  That's  a  possibility ;  that  is  where  I  could  have  gotten  it. 

Mr.  Weitz.  But  you  do  not  remember? 

Mr.  Lilly.  No. 

Mr.  Sanders.  Do  you  still  get  correspondence  to  or  from  Van  Dyk  ? 

Mr.  Lilly.  Yes;  I  have  correspondence  on  September  14,  1970,  to 
Bob  Lilly  from  Ted  Van  Dyk  regarding  the  Whittemore  check. 

Bob,  per  our  discussion,  please  tear  up  the  signed  receipt  for  the  Whittemore 
check.  The  check  itself  has  been  destroyed  on  this  end.  A  new  check  for  $1,000 
to  Maine  for  Muskie  should  be  drawn  to  replace  it. 

Please  send  it  directly  with  new  receipt  for  signature  to  Mr.  Robert  Nelson, 
Room  1004,  1660  L  Street,  N.W.,  Washington,  D.C.  Many  thanks. 

Mr.  Sanders.  This  is  the  one  we  already  have,  September  14? 

Mr.  Lilly.  I  did  not  realize  that,  I'm  sorry. 

That  is  all  of  the  correspondence.  I  have  some  other  correspondence 
there  to  Milt  Semer,  or  for  Milt  Semer  pertaining  to  Muskie  in  the  same 
file,  but  nothing  else  from  Van  Dyk. 

Mr.  Sanders.  Mr.  Lilly  has  just  furnished  me  a  copy  of  a  letter  from 
Milton  P.  Semer  to  David  Parr.  It  is  undated,  but  it  says :  "received 
July  20, 1970."  And  handwritten  at  the  top  is  a  notation :  "file  Muskie 
political." 

I  am  including  this  with  the  other  Van  Dyke-Muskie  letters  that  you 
have  just  handed  me. 

Mr.  Nicholas.  Can  we  go  off  the  record  for  a  minute  ? 

TDiscussion  off  the  record.l 

Mr.  Sanders.  All  right.  We  will  go  back  on  the  record. 

Mr.  Lilly  has  just  handed  me  a  series  of  documents  pertaining  to 
contributions  to  Senator  Muskie  in  1970.  And  I  am  going  to  add  these 
to  the  ones  he  has  already  given  me,  and  I  am  going  to  go  through  them 
and  mark  them  for  the  record  and  identify  them. 

We  have  already  marked  as  exhibit  No.  17,  his  own  memo  dated 
April  17, 1970. 

I  will  mark  as  exhibit  No.  18  a  memo  from  Ted  Van  Dyk  to  Bob 
Lilly  dated  September  14, 1970,  relating  to  a  $1,000  check  to  Maine  for 
Muskie. 

[Whereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No.  18  for  identification.*] 

•See  p.  602.5. 


5951 

Mr.  Sanders.  Exhibit  No.  19  is  a  letter  dated  July  9,  1970,  from 
Ted  Van  Dyk  to  Don  Nicoll  pertaining  to  contributions  to  the  Muskie 
campaign,  and  also  making  references  to  the  milk  program. 

[Whereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No.  19  for  identification.^] 

Mr.  Sanders.  Exhibit  No.  20,  a  letter  from  Milton  P.  Semer  to  David 
Parr,  undated,  marked  "received  July  20,  1970,"  concerning  presum- 
ably Senator  Muskie's  campaign. 

["VVliereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No.  20  for-  identification.-] 

Mr.  Sanders.  Exhibit  No.  21  will  be  a  multipaged  exhibit  containing 
a  note  on  the  letterhead  of  Stuart  H.  Russell,  addressed  to  "Bob,  for 
your  information,"  undated;  a  letter  from  Semer  to  Russell  dated 
August  3, 1970 ;  a  letter  from.  Semer  to  Russell  dated  December  1, 1970, 
thanking  Russell  for  a  $5,000  contribution  to  the  Muskie  Election 
Committee. 

A  note  on  the  letterhead  of  Russell  to  Bob,  "for  your  information 
and  record,"  not  dated.  An  undated  letter  from  Muskie  to  Nelson 
marked  "received  August  27,  1970";  a  letter  from  Russell — correction, 
a  copy  of  a  letter  from  Russell  to  Muskie  Election  Committee  showing 
a  carbon  copy  to  Bob  Lilly,  dated  November  24,  1970,  indicating  a, 
check  had  been  enclosed  in  the  sum  of  $5,000  payable  to  the  Muskie 
Election  Committee;  and  that  this  was  sent  at  the  request  of  Bob 
Lilly  of  AMPL 

A  copy  of  a  letter  dated  Julv  28,  1970,  from  Lilly  to  Van  Dyk  en- 
closing two  checks  for  the  Muskie  campaign,  and  indicating  that  these 
checks  along  with  checks  from  Dairymen,  Inc.,  and  Mid-America, 
make  a  total  of  slightly  over  $10,000 ;  aii  invoice  on  the  billhead,  Stuart 
H.  Russell,  dated  July  24,  1970,  to  Associated  Milk  Producers.  Inc. 
for  $5,100  for  lecal  services  rendered  in  the  purchase  of  Wilsey-Ben- 
nett  and  Pure  Milk  Producers  Co-op  of  Winsted,  Minn.  A  copy  of  a 
Stuart  Russell  check  for  $1,750  to  Maine  for  Muskie,  dated  July  24, 
1970.  and  a  Stuart  Russell  check  for  $1,650  to  Muskie  Election  Com- 
mittee, dated  July  24. 1 970. 

A  copv  of  a  legal-size  page  bearing  handwritten  figures  and  words, 
apparently  in  reference  to  the  precedinc  two  checks;  a  letter  from 
Russell  to  Lillv  of  Jannarv  13. 1971.  attaching  a  letter  of  December  22, 
1970.  from  Muskie  to  Russell  expressing  appreciation  for  help  and 
encouragement. 

f^Vliereupon.  the  documents  referred  to  were  marked  Lilly  exhibit 
No.  21  for  identification.''] 

Mr.  Sanders.  We  will  make  copies  of  these  for  our  use,  and  return 
these  to  you. 

All  right.  Now.  for  the  record,  Mr.  Lillv,  what,  if  any,  conversations 
have  vou  had  sinre  19fi9  with  Ted  Van  Dyk  concerning  contributions 
to  a  campaign  of  Senator  Muskie? 

Mr.  Ltij.y.  I  am  not  sure  that  I  have  had  conversations.  Certainly, 
I  do  not  recall  any. 

I  have  a  series  of  letters.  I  have  some  memos.  I  do  have  notes  of 
telephone  calls  from  Milt  Semer  about  Van  Dyk. 


1  Spp  p.  fi02fi. 

2  Rpp  p.  Rn2S. 
^  Sop  p.  R02ft. 


5952 

Mr.  Sanders.  Do  you  have  any  personal  recollections  at  the  moment 
of  conversations  with  Van  Dyk  concerning  contributions  to  the  Muskie 
campaign  ? 

Mr.  Lilly.  I  have  not ;  no. 

Mr.  Sanders.  The  documents  which  you  have  just  furnished  to  me, 
and  which  you  have  identified  for  the  record,  all  came  from  your 
own  files? 

Mr.  Lilly.  From  my  own  files. 

Mr.  Sanders.  Do  you  have  knowledge  of  any  AMPI — funds  and  I 
say  this  intending  to  separate  any  TAPE  funds.  Do  you  have  knowl- 
edge of  any  AMPI  funds  since  1969  being  furnished  for  the  use  or 
benefit  of  a  Muskie  political  campaign?  [Pause,]  Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Sanders.  Back  on  the  record. 

From  1969  forward,  do  you  have  any  knowledge  of  any  AMPI  funds 
going  for  the  use  or  the  benefit  of  the  Muskie  campaigns  ? 

Mr.  Lilly.  Not  any  that  I  recall,  and  not  any  that  I  handled. 

Mr.  Sanders.  Wliat  knowledge,  if  any,  did  you  have  of  Russell 
making  funds  available  for  tlie  Muskie  campaign? 

Mr.  Lilly.  Only  the  correspondence  that  we  referred  to  earlier, 
that  he  made  contributions  to  Muskie,  and  some  exhibits  that  you 
have  already  marked.  And  that  is  my  total  knowledge. 

Mr.  Sanders.  These  exhibits  would  tend  to  indicate  that.  But  are 
you  saying  you  have  no  independent  knowledge  of  these  transactions? 

Mr.  Lilly.  Actually  transpiring?  Not  until  after  the  fact.  I  re- 
ceived copies — they  transpired  and  I  was  advised  of  it  by  having  re- 
ceived a  letter  with  no  prior  knowledge  to  it. 

Mr.  Sanders.  You  had  no  involvement  in  the  development  of  the 
transaction  ? 

Mr.  Lilly.  No,  no. 

Mr.  Sanders.  Did  you  s\ibsequently,  however,  leam  how  Stuart 
Russell  came  to  make  these  contributions  ? 

Mr.  Lilly.  No,  I  did  not  outside  of  having  received  his  correspond- 
ence. And  to  this  day,  I  do  not  know  what  spurred  him  on  to  make  a 
contribution,  or  how  he  became  involved. 

Mr.  Sanders.  Has  Ted  Van  Dyk  at  any  time  solicited  you  to  make 
contributions  to  the  Muskie  campaign? 

Mr.  Lilly.  I  have  correspondence  from  Ted  Van  Dyk,  but  to  my 
knowledge,  I  cannot  recall  having  talked  with  him,  or  him  having 
solicited  through  a  letter  to  ad^nse  me  of  certain  things  happening. 
It  would  indicate  that,  certainly,  we  had  corresponded  or  had  had 
conversations  about  Muskie's  campaign. 

Mr.  Sanders.  Do  you  have  any  recollection  of  conversations  between 
you  and  Russell  concerning  contributions  to  Muskie? 

Mr.  Lilly.  No,  outside  of  his  having  advised  me  that  he  had  made 
contributions  and  sending  me  some  copies  of  correspondence,  but  not 
prior  to.  It  was  after. 

Mr.  Sanders.  Now,  these  [indicating]  documents  which  you  fur- 
nished me  and  which  we  have  marked  for  the  record  contain  Russell's 
invoice  to  AMPI  for  legal  services  in  the  amount  of  $5,100,  July  24, 
1970.  I  see  no  indication  of  any  notations  on  it  by  way  of  approval 
or  routing  within  AMPI. 


5953 

Do  you  have  any  independent  recollection  about,  receiving  or  proc- 
essing that  document  ? 

Mr.  Lilly.  No.  T  do  not  have.  It  could  well  have  crossed  my  desk, 
and  1  could  have  jmssed  it  along,  but  I  do  not  see  my  usual  OK  nota- 
tion on  it. 

Mr.  Sanders.  Woidd  there  be  any  reason  why  you  would  have  in 
your  files  a  bill  of  Russell  to  AMPI  for  services,  which  were  indeed 
legitimate? 

Mr.  Lilly.  I  would  say  that  I  have  a  copy  in  my  file.  Mr,  Russell 
sent  me  a  copy  to  keep  me  posted  of  some  of  his  actions  that  he  was 
taking,  and  I  would  assume  that  it  was  paid. 

Mr.  Sanders.  I  see. 

What  you  are  saying  is  that  in  as  much  as  you  have  a  copy  of  this 
Russell  invoice  in  your  file,  it  might  be  that  this  was  sent  to  you  by 
Russell ;  at  the  same  time,  he  would  have  sent  the  original  to  AMPI's 
accounting  office  ? 

Mr.  Lilly.  To  the  comptroller. 

Mr.  Sanders.  And  this  was  just  to  you  foi*  information  ? 

Mr.  Lilly.  For  information,  just  a  co])v  of  tlie  checks  he  sent  to  me 
at  the  same  time. 

Mr.  Sanders.  Now,  what  I  am  saying  is,  if  Russell  were  indeed  bill- 
ing AJNIPI  for  services  he  had  truly  performed  for  AMPI,  would  there 
be  any  reason  why  he,  would  send  you  a  copy  of  the  bill  ?  And  let's  be 
more  specific  here. 

This  bill  says  for  legal  services  rendered  in  the  purchase  of  Wilsey- 
Bennett  and  Pure  Milk  Producers  Co-op  in  AVinstead,  Minn.  Is  there 
any  reason  why  you  would  need  to  kno^^  that  he  had  performed  such 
services  for  AMPI  ? 

Mr.  Lilly.  I  will  say  that  on  the  Wilsey-Bennett — I  am  familiar 
with  the  Wilsey-Bennett  operation  in  Oklahoma  City,  and  I  know 
that  Mr.  Russell  was  involved  in  its  purchase.  It  is  a  butter  plant  that 
makes  butter  prints,  little  patties,  butter  patties.  And  it  still  carries 
the   same   name,  Wilsey-Bennett. 

I  am  not  familiar  with  the  cooperative,  but  I  tie  the  Inlling  itself  to 
the  two  checks  attached  to  it.  to  l)e  more  responsive  to  your  question. 

Mr.  Sanders.  To  the  two  checks  to  Muskie  ? 

Mr.  Lilly.  True. 

Mr.  Sanders.  You  would,  although  you  cannot — you  have  no  facts  to 
establish  it.  your  deduction  is  that  he  paid  the  checks  to  Muskie  and 
billed  AlVfPi  an  even  larger  amount  to  cover  those  checks  plus  his 
tax  consequence  ? 

Mr.  Lilly.  That  is  true. 

Mr.  Sanders.  Who  \s-ould  have  asked  him  to  do  this,  or  arranged  for 
him  to  do  this  within  AMPI  ? 

Mr.  Lilly.  It  would  be  one  of  three  people.  It  would  be  myself — 
which  I  did  not.  It  would  be  Mr,  Harold  Nelson,  or  Mr.  Dave  Parr. 

Mr.  Nicholas.  Can  we  go  off  the  record  just  a  second  ? 

[Discussion  off  the  record.] 

Mr.  Sanders.  Back  on  the  record. 

Let  me  just  ask  you  one  more  time  this  question  :  Is  there  any  reason 
why  you  would  have  had  to  know  or  Russell  would  have  thought  that 
you  should  know  that  he  was  billing  AMPI  for  legal  services  in  the 
purchase  of  this  co-op  ? 


5954 

Mr.  Lilly.  Mr.  Russell  knew  that  in  my  position,  as  far  as  AMPI 
was  concerned,  I  worked  largely  on  the  political  end  of  it,  if  we  might 
use  that  word  in  the  broadest  sense.  And  I  think  he  would  have  made 
every  effort  to  have  kept  me  informed  as  to  what  might  have  tran- 
spired, even  though  I  would  have  had  no  knowledge  of  it;  just  to  be 
sure  that  I  did  know  it. 

Mr.  Sanders.  Does  it  appear  to  you  that  this  copy  of  the  Russell  in- 
voice came  to  you  with  copies  of  Russell's  checks  attached? 

Mr.  Lilly.  Yes,  it  does. 

Mr.  Sanders.  Does  it  appear  to  you  also  that  the  handwritten  notes 
were  also  attached,  or  are  these  yours  ? 

Mr.  Lilly.  Those  are  handwritten.  Most  of  those  handwritten  notes 
are  Isham's.  The  note  in  the  left-hand  column  are  my  notes.  The  rest  of 
them  are  all  Isham's  writing. 

Mr.  Sanders.  So  that  Isham  then  was  knowledgeable  concerning 
Russell's  payments  to  Muskie  and  the  contemporaneous  billing  to 
AMPI? 

I\Ir.  Lilly.  Yes. 

Mr.  Nicholas.  Let  me  ask  him  one  question  off  the  record. 

[Discussion  off  the  record.] 

Mr.  Sanders.  The  handwritten  notes  would  not  have  come  to  you 
from  Russell,  but  they  were  prepared  in  response  to  the  receipt  of  the 
invoice  ? 

Mr.  Lilly.  They  originated  in  the  home  office,  true.  That  is  right. 

Mr.  Sanders.  Then  there  is  this  copy  of  a  letter  from  you  to  Van  Dyk, 
dated  July  28,  which  purports  to  enclose  the  originals  of  the  two  checks 
for  which  we  have  copies. 

So  I  presume  tliat  in  addition  to  Russell  sending  you  copies  of  the 
checks  attached  to  his  invoice  copy,  he  must  have  sent  you  the  originals  ? 

Mr.  LrLLY.  Evidently,  he  did  send  me  the  originals;  the  letter  being 
dated  the  28th,  and  the  checks,  the  24th;  he  could  well  have  sent  me 
this,  because  apparently  I  did  forward  the  checks  on.  And  apparently 
I  forwarded  the  checks  to  Dairymen,  Inc.,  at  the  same  time  or  re- 
ferred to  that. 

So  evidently,  I  did  receive  the  checks,  made  Xerox  copies  of  the 
checks  myself  before  forwarding  them  on. 

Mr,  Sanders.  Why  would  not  Dairymen  and  Mid-America  have  sent 
their  own  rather  than  sending  them  to  you  for  transmittal? 

Mr.  Lilly.  Let  me  go  off  the  record. 

[Discussion  off  the  record.] 

Mr.  Sanders.  Back  on  the  record. 

Your  letter  of  July  28  to  Van  Dyk  makes  mention  of  checks  from 
Dairymen  and  Mid-America.  Why  would  you  find  it  necessary  to 
explain  to  Van  Dyk  concerning  checks  from  other  firms? 

Mr.  Lilly.  Well,  of  course,  the  two  co-ops  both  have  political  arms. 
They  are  both  dairj^  co-ops  in  this  instance.  Somewhere  between  Ted 
Van  Dyk  and  Milton  Semer — Ted  Van  Dyk  is  dealing  with  the  same 
people  that  Milton  Semer  is  dealing  with,  meaning  AMPI,  Dairy- 
men, Inc..  Mid-America,  three  cooperatives  all  had  political  arms. 

And  they  were  forwarding  me  the  checks  to  move  on  forward  to  Ted 
Van  Dyk ;  at  the  same  time.  Mr.  Milton  Semer  and  some  of  the  corre- 
spondence indicates,  the  telephone  calls  indicate,  that  he  wanted  to 
know  where  Mr.  Van  Dyk  got  involved,  because  he,  more  or  less,  was 


5955 

raising  the  money  for  Mr,  Muskie's  reelection,  and  how  did  Van  Dyk 
come  into  this  ?  Apparently,  there  was  some  play,  some  animosity,  some 
feeling  between  the  two  of  them  as  to  who  was  to  raise  money  for 
Miiskie ;  and  why  Ted  Van  Dyk  would  be  involved  in  it. 

Mr.  Sanders.  In  other  words,  Semer  was  disturbed  that  Van  Dyk 
was  contacting  the  same  people  he  was  contacting? 

Mr.  Lilly.  That  is  right. 

Mr.  Sanders.  But  were  these  contacts  that  we  have  just  now  men- 
tioned, for  the  purpose  of  obtaining  funds  from  the  political  funds, 
the  legal  political  arms  ? 

Mr.  Lilly.  The  checks  from  SPACE  that  I  believe  we  have  referred 
to  here  are  from  their  political  arm. 

Mr.  Sanders.  It  does  not  say  that. 

Mr.  Lilly.  SPACE  happens  to  be  the  political  arm  of  Dairymen, 
Inc.  I  just  happen  to  know  that. 

The  checks  from  AjNIPI  via  Stuart  Russell  are  not  from  TAPE 
funds,  but  are  from  his  funds.  Pie  was  reimbursed  evidently  from 
AMPI  corporate  funds. 

Mr.  Sanders.  You  have  no  knowledge  that  the  checks  from  Mid- 
America  and  Dairvnieii,  Inc..  were  from  other  than  their  legal  politi- 
cal arms? 

Mr.  Lilly.  That  is  true. 

Mr.  Nicholas.  On  that  point,  I  wanted  to  ask  you,  Mr.  Lilly:  was 
Mr.  Stuart  Russell  also  representing  Dairymen's,  Inc.  at  the  same  time 
he  was  representing  AMPI,  or  do  you  know  ? 

Mr.  Lilly.  No,  To  my  knowledge,  he  v>-as  only  representing  AMPI, 
but  having  had  some  conversation  with  Mr.  Russell,  he,  too,  was  being 
contacted  by  Mr,  Van  Dyk  and  Mr.  Semer,  and  was  caught  in  the  same 
confusion  that  I  was. 

Mr.  Sanders.  Now,  directing  your  attention  to  the  copy  of  the  letter 
you  received  from  Russell,  v,hich  he  addressed  to  Muskie  Election 
Committee  on  November  24.  It  states  that  it  encloses  a  check  in  the 
sum  of  $5,000  at  your  request. 

Do  you  have  a  recollection  of  receiving  this  copy  from  Russell  ? 

Mr.  Lilly.  The  copy  is  in  my  file,  and  I  am  aware  of  that.  I  do  not 
remember  the  actual  receipt  of  it,  and  on  the  request  for  the  contribu- 
tion itself,  I  certainly  have  a  serious  doubt  that  I  originated  that  re- 
quest to  Mr.  Russell. 

Mr.  Sant)ers.  How  do  you  tliink  that  would  have  occurred? 

Mr.  Lilly.  I  think  it  would  have  occurred  through  Mr.  Van  Dyk 
having  called  Mr.  Russell,  and  stating  that  he  had  talked  with  me, 
and  he  should  make  a  contribution  to  Mr.  Muskie. 

Mr.  Sanders.  And  Van  Dyk — any  mention  Van  Dyk  made  to  Rus- 
sell of  liaving  talked  to  you  was  not  accurate  ? 

Mr.  Lilly.  No;  because  T  have  no  knowledge  of  the  $5,000  check 
with  the  exception  of  the  instruments  that  you  have  there  before  you. 

Mr.  Sanders.  This  letter,  being  dated  November  24,  would  have  been 
subsequent  to  the  election  in  1070,  early  November  1970.  Did  it  strike 
you  at  the  time  that  the  campaign  was  over  ? 

!Mr.  Lilly.  I  am  not  sure  that  it  did  at  the  time.  It  would  now,  but 
to  me  that  is  not  too  unusual,  because  you  have  campaign  debts  after 
the  campaign  is  over.  And  I  really  do  not  tie  a  great  deal  of  significance 
to  it.  but  it  minfht  ha^e  some ■ 


5956 

Mr.  Sanders.  Do  you  have  any  knowledge  as  to  whether  Russell 
received  reimbursement  from  AMPI  for  this  $5,000  in  Noveniber? 

Mr.  Lilly.  I  have  no  personal  recollection  of  whether  he  did  or  not, 
but  possibly  a  search  of  AlVIPI  files,  I  feel,  would  reveal 

Mr.  Sanders.  Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Sanders.  Back  on  the  record. 

Mr.  Weitz.  With  regard  to  other  transactions  and,  in  general,  all  the 
transactions  for  reimbursement  for  political  contributions  by  Mr.  Kus- 
sell,  what  contacts  do  you  remember  with  him  or  discussions  with 
regard  to  the  repayment  to  you  for  the  original  loan  or  for  other  trans- 
actions providing  money  to  you  for  political  purposes  ? 

Mr.  Lilly.  Are  you  referring  to  the  original  conversation  ? 

Mr.  Weitz.  Starting  from  the  original;  can  you  remember  what 
happened  originally  and  what  you  talked  to  him  about  over  a  period 
of  time  ? 

Mr.  Lilly.  No.  I  do  not  remember  originally  what  we  might  have 
discussed  following — once  we  got  into  the  pattern,  it  really  was,  for 
the  most  part,  a  telephone  call  for  me  to  either  Mr.  Russell  or  his  secre- 
tary, Jane  Hart,  H-a-r-t,  that  I  needed  a  check  for  $5,000,  or  I  needed 
a  check  for  $2,000,  or  whatever  the  amount  might  be. 

Consequently  the  checks  she  would  send,  or  Mr.  Russell  would  send 
it — I  did  not  go  through  the  formality  of  having  to  talk  to  Mr.  Rus- 
sell personally.  And  many  times,  I  did  not  talk  to  Mr.  Russell,  and 
some  of  the  checks  were  signed  by  Jane  Hart.  Apparently  she  had  the 
authority  by  Mr.  Russell  to  sign.  She  did  not  question  it  either,  and 
she  sent  them  to  me. 

Mr.  Weitz.  At  the  outset,  did  you  discuss  with  him — let  me  start  this 
way.  In  exhibit  6,  it  indicates  the  first  payment  from  Russell  was  on 
December — received  and  deposited  by  you  December  31,  1969;  the 
amount  of  $5,000. 

Now,  at  that  time  or  some  short  time  thereafter,  did  you  discuss  that 
from  time-to-time  you  would  need  additional  moneys  and  that  is  why 
he  established  a  procedure  whereby  you  could  call  his  secretary  and 
obtain  it  without  him  ? 

Mr.  Lilly.  I  do  not  know,  in  the  beginning,  if  I  talked  with  Mr. 
Russell  about  repayment  of  this  or  not,  or  whether  Mr.  Isham  might 
have  talked  with  him  or  whether  Mr.  Nelson  might  have  talked  with 
him. 

This,  I  do  know ;  that  insofar  as  Mr.  Russell  and  myself,  we  had  an 
understanding.  He  did  not  question  me,  and  I  did  not  tell  him.  I 
told  him  I  needed  a  check  in  a  certain  amount,  and  he  would  send  it  to 
me.  I  do  not  truthfully  remember  the  beginning. 

After  that,  if  we  had  a  contribution  to  a  particular  individual,  I  do 
not  remember  ever  having  told  him  that  it  was  going  to  so-and-so  to 
repay  a  note.  I  just  told  him  that  I  needed  some  money. 

Mr.  Weitz.  Did  you  ever  discuss  the  fact  that  in  general  these 
moneys  were  being  used  directly  or  indirectly  for  political  purposes? 

Mr.  Lilly.  Yes ;  I  did  that. 

Mr.  Weitz.  Do  you  recall  any  specific  conversation  to  that  effect,  or 
specific  circumstances  to  that  effect  ? 

Mr.  Lilly.  No,  I  do  not  recall  the  circumstances.  But  I  feel  that  we 
h-^d  betAv^en  the  two  of  ns — he  realized  they  were  for  political  purposes, 
'  :  '  ^^p  was  not  questioning  me. 


5957 

Mr.  Nicholas.  Going  back  to  the  beginning,  before  you  ever  received 
any  checks  from  Stuart  Russell — do  you  understand  what  I'm  talking 
about? 

Mr.  Lilly.  Yes. 

Mr.  Nicholas.  Remember  tliat  exhibit  with  the  attorneys'  names  on 
it,  made  out  by  Isham  and  Harold  Nelson,  were  there  any  conversa- 
tions between  you  and  Russell,  or  Harold  Nelson  and  you  and  Russell, 
or  you,  Russell,  Harold  Nelson  and  Isham  concerning  how  this  was 
going  to  operate?  Bear  in  mind,  if  you  just  make  out  a  list  of  lawyers' 
names  and  put  amounts  by  them,  they  are  not  a  party  to  the  transaction 
at  the  time. 

How  did  Russell  become  a  party  to  that  transaction?  That  is  what 
Alan  is  asking  you,  I  believe. 

Mr.  Lilly.  On 

Mr.  Nicholas.  See  if  you  can  think  back. 

Mr.  Lilly.  On  looking  back  at  exhibit  2,  where  the  list  of  lawyers' 
naines  are,  I  notice  that  to  the  left  of  the  names,  there  is  a  dash;  Joe 
Long,  F.  Masters,  S.  Russell,  Jim  Jones. 

I  see  on  Jim  Jones,  there  is  a  1,  indicating  that  DeVier  Pierson 
was  to  contact  him ;  just  to  the  right.  Bob  Isham  was  to  contact  him — 
I  mean  the  figure  with  a  dash  to  the  left.  I  notice  on  Joe  Long  and 
Frank  Masters,  I  have  a  check  that  says  OK,  that  indicates  that  I 
talked  with  them  or  asked  them  for  some  money  at  the  time. 

And  I  am  not  sure  what  it  is.  It  does  not  indicate  on  this  par- 
ticular instrument  that  I  talked  to  Stu  Russell  at  the  time.  But  that 
doesn't  mean — I  just  cannot  recall  a  conversation  I  had  witli  him 
about  it. 

Mr.  Weitz.  Do  you  ever  recall  talking  to  him  about  his  recouping 
moneys  paid  to  you  by  billing  the  firm,  billing  the  company  ? 

Mr.  Lilly.  Yes.  I  have  had  conversations  with  Mr,  Russell,  and  it 
was  in  San  Antonio,  and  it  was  one  conversation,  and  I  will  tie  it 
down  to  a  date,  because  I  have  a  note  of  it.  It  is  on  May  3,  1971.  And 
this  actual  conversation — my  notes  read  that  I  phoned  him — meaning 
Mr.  Russell — on  May  1,  and  met  with  him  in  person  on  the  morning 
of  May  3  in  San  Antonio.  "That"  on  page  4  should  have  dashes  around 
it. 

And  at  that  particular  time,  it  was  evident  that  an  amount  of 
$10,000  was  needed  for  a  contribution,  for  an  expenditure.  And  Mr. 
Russell  talked  with  Mr.  Isham  and  myself,  and  we  talked  about  ways — 
he  indicated  this  was  an  expensive  route  to  sfo.  For  him  to  make  avail- 
able to  me  $10,000,  it  would  cost  AMPI  $20,000,  and  surely  there  could 
be  another  way  set  up. 

And  he  suggested  setting  up  dummy  procedure  accounts,  set  up  re- 
pair accounts,  et  cetera 

Mr.  Weitz.  So  it  was  clear  from  that,  that  he  knew  that  whatever 
he  paid  you  he  would  recoup,  and  it  would  cost  AMPI  double? 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  Were  there  occurrences  though — you  do  not  recall  any 
specific  situation  wliere  you  did  discuss  the  political  purposes  to  which 
the  funds  were  used  ? 

Mr.  Lilly.  I  could  have.  I  do  not  recall  it. 

Mr.  Wettz.  Of  course,  we  have  just  referred  to  the  moneys  that 
Russell  paid  to  Muskie,  and  presumably  was  reirnbui-stHl  by  AjNIPI. 
So  that  would  be  one  instance  at  least^ 


5958 

Mr.  Lilly.  Right. 

Mr.  Weitz  [continuing].  In  which  he  was  using  corporate  funds 
to  funnel  through  to  corporate  purposes. 

Mr.  Lilly.  True. 

Mr.  Weitz.  But  you  were  not  directly  involved  in  that? 

Mr.  Lilly.  No,  not  directly  involved. 

Mr.  Weitz.  I  would  like  you  to  take  a  look  at  exhibit  22,  which  is 
a  Xeroxed  copy  of  a  short  note  on  Stuart  Russell  note  paper.  And  it 
reads,  "Bob,  this  represents  $5,000  cash  given  Preach  Griffith  for  Page 
Belcher  campaign  funds.  My  direction  is  due.  This  came  from  Leo 
Suttle."  And  it  is  signed,  apparently,  Stuart  H.  perhaps  with  a 
squiggle. 

Could  you  look  at  this  and  see  whether  you  have  ever  seen  that,  and 
identify  it  for  us? 

[Whereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No.  22  for  identification.*] 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Weitz.  Let's  go  back  on  the  record. 

Mr,  Lilly,  can  you  tell  us  what  transaction  this  exhibit  22  refers  to  ? 

Mr.  Lilly.  Yes,  In  the  year  of  1970,  Mr.  Page  Belcher,  Congressman 
Page  Belcher,  was  running  for  reelection,  and  Jim  Jones  was  his  op- 
ponent. I  acted  alone,  on  my  own,  without  talking  with  anyone,  and 
made  a  contribution  to  Mr.  Jim  Jones  from  TAPE  for  $5,000,  and 
this  apparently  upset  a  number  of  people  including  Mr.  Nelson  and 
Mr.  Parr  and  other  people  in  my  own  organization.  And  the  determina- 
tion was  made  that  they  would  have  to  make  contributions  to  Mr. 
Belcher. 

The  contributions — ^the  decision- was  made  by  someone  that  the  con- 
tributions would  be  made  in  cash.  And  on  or  about  June  1970,  the  first 
contribution  in  the  amount  of  $5,000  was  made.  It  was  made  and  de- 
livered by  Mr.  Tom  Townsend  and  Mr.  Keiffer  Howard — that's 
K-e-i-f-f-e-r. 

And  Mr.  Russell  sent  me  this  exhibit  22  to  indicate  to  me  that  he  had 
spent  $5,000,  had  cashed  a  check  for  that  amount  of  money,  and  given 
to  them.  Mr.  Griffith,  to  my  knowledge,  was  not  along  with  them,  but 
Mr.  Griffith  was  chairman  of  our  TAPE  committee ;  he  is  an  AMPI 
board  member.  He  does  live  in  Oklahoma,  and  he  certainly  would  be 
involved  and  interested. 

At  a  later  date  in  1970,  at  about  September,  $10,000  cash  was  con- 
tributed in  the  same  manner,  delivered,  in  that  instance,  by  Mr.  Town- 
send  and  by  Mr.  Dave  Parr  to  Mr.  Belcher.  And,  again,  the  cash  was 
obtained  from  Mr.  Stuart  Russell,  and  the  delivery  made.  And,  in  turn, 
in  time,  he  billed  AMPI  for  the  contribution. 

Mr.  Weitz.  So  it  is  clear  from  at  least  this  exhibit  and  your  recollec- 
tion of  those  two  instances  that  Mr.  Russell  knew,  and  at  least  in  two 
instances  acted  as  a  conduit  for  corporate  funds  for  political  purposes 
to  a  political  candidate  ? 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  Were  there  any  other  notes  which  he  would  append  to 
his  bills  which  would  indicate  moneys  which  he  was  funneling  through, 
in  addition  to  his  regular  billing  ? 

♦See  p.  6041. 


5959 

Mr.  Lilly.  I  do  not  recall  any  notes.  There  possibly  could  have  been 
some,  but  the  one  you  see  there,  exhibit  22,  is  the  only  one  that  I  have 
in  existence.  Of  course,  earlier  we  referred  to  the  memo,  that  he  sent 
me  some  correspondence  that  pertained  to.  some  contributions. 

Mr.  Weitz.  Muskie  contributions  ? 

Mr.  Lilly.  For  Muskie.  But  to  my  knowledofe,  this  is  the  only  thing 
in  writing  that  I  do  have  from  him,  outside  of  this  conversation  that 
was  held  with  Mr.  Isham  at  another  time.  But  to  my  personal  knowl- 
edge, I  know  that  we  talked  about  it. 

Mr.  Weitz.  "What  about  that  conversation  with  Mr.  Isham  ? 

Mr.  Lilly.  This  was  when  we  were  talking  about  ways  and  manners, 
a  cheaper  way  of  going  about  making  these 

Mr.  Weitz.  Are  you  aware  of  whether  Mr.  Russell,  in  both  April 
of  1971  and  April  of  1972.  asked  for  additional  funds  to  cover  his 
excess  taxes  as  a  result  of  this  conduit  operation  ? 

Mr.  Lilly.  In  April 

Mr.  Sanders.  May  I  just  ask  one  question  about  this  [indicating]  ? 

Mr.  Weitz.  Certainly. 

Mr.  Sanders.  This  exhibit  22  indicates  that  Russell  gave  the  $5,000 
cash  to  Griffith  for  Belcher.  And  yet,  in  explaining  it  to  us,  I  thought 
you  said  it  was  given  to  Townsend  and  Howard  ? 

Mr,  Lilly.  That  is  true;  they  delivered  it.  I  think  he  mentions 
Preach  Griffith  in  this  to  indicate  to  me  that  ISIr.  Griffith  had  OK'd  a 
contribution  to  him;  but  actually,  physically  handling  it  was  Tom 
Townsend  and  Keiffer  Howard  making  delivery.  And  as  to  how  much 
involvement  Preach  Griffith  had.  I  am  not  aware  of  that. 

But  I  think  this  is  an  indication,  because  I  do  not  think  that  Mr. 
Griffith  delivered  it  to  Tulsa,  and  I  assume  they  delivered  it  to  Tulsa 
to  the  (/ongressman. 

Mr.  Weitz.  Was  it  not  true  that  Preach  Griffith  had  complained  to 
you  personally  about  the  contribution  you  had  approved  for  Jones? 

Mr.  Lilly.  Very  violently ;  yes. 

Mr.  Weitz.  Did  he  also  talk  to  you  directly  about  this  other  contribu- 
tion to  Belcher? 

]\Ir.  LiTj,Y.  He  said,  "Well,  we  are  going  to  havo  them  unha])py  with 
us,  and  we  are  going  to  have  to  make  contributions  to  Belcher  and  do 
what  we  can  to  get  him  reelected."  And,  of  course,  we  had  a  difference 
of  opinion  on  this,  but  that  is  neither  here  nor  there,  because  in  turn 
the  decision  was  made — I  think  Mr.  Belcher  made  the  decision  that  he 
would  not  take  a  political  contribution  from  TAPE.  Since  we  had 
made  a  political  contribution  to  Mr.  Jones,  he  would  not  take  one. 

So,  evidently  he  was  going  to  be  reelected,  so  some  effort  was  made 
to  make  amends  with  Mr.  Belcher. 

Mr.  Weitz.  Could  you  tell  us  what  you  know  about  Russell's  request 
for  additioncil  compensation? 

Mr.  Sanders.  I  am  sorry ;  I  am  still  on 

Mr.  Weitz.  Oh,  I  am  sorry. 

Mr.  Sanders.  Griffith  was  a  member  of  the  board  of  AMPI? 

Mr.  Lilly.  Yes ;  he  was  then,  and  he  is  now. 

Mr.  Sanders.  I  have  never  heard  before  the  name  of  Suttle.  Can  you 
identify  him? 

Mr.  Lilly.  Leo  Suttle  is  on  physical  disability  retirement,  living  in 
Kansas,  Wichita  I  believe,  Kansas.  He  was  a  division  manager  when 


5960 

we  had  MPI,  and  I  am  not  sure  of  the  time  that  he  went  on  retirement, 
disability  retirement,  but  he  still  is  on  disability  retirement. 

Mr.  Sanders.  It  indicates  that  he 

Mr.  Lilly.  He  was  aware  of  it. 

Mr.  Sanders.  Not  only  aware  of  it,  but  that  he  had  some  authority  in 
the  matter.  It  said :  "My  direction  to  do  this  came  from  Leo  Suttle." 

Mr.  Lilly.  This  would  indicate  that  to  me,  and  I  have  not  talked 
with  Mr.  Suttle — along  about  this  time,  he  went  on  retirement,  and  he 
has  been  rather  inactive.  He  still  is  on  retirement,  I  might  say. 

Mr.  Sanders.  Did  he — in  general,  did  he — was  it  your  understanding 
that  he  could  exercise  some  authority  in 

Mr.  Lilly.  In  this  field  ? 

Mr.  Sanders  [continuing].  In  granting  political  contributions? 

Mr.  Lilly.  Mr.  Suttle  was  division  manager.  He  had  the  State  of 
Kansas  that  he  was  division  manager  in,  and  in  the  State  of  Kansas, 
certainly,  before  you  made  a  political  contribution,  you  pretty  well 
checked  with  Mr.  Suttle.  He  felt  rather  strongly  about  it. 

Here  we  have  a  situation,  being  in  the  State  of  Oklahoma,  which 
was  out  of  his  domain,  so  to  speak,  but  apparently  he  felt  pretty 
stix)ngly  about  my  having  contributed  to  Jim  Jones,  as  well. 

Mr.  Nicholas.  On  that  point,  I  would  like  to  ask  Bob  a  question 
off  the  record,  in  case  it  is  not  germane. 

[Discussion  off  the  record.] 

Mr.  Sanders.  Back  on  the  record. 

Mr.  Weitz.  You  were  going  to  tell  me  about  your  knowledge  of  Rus- 
sell's request  for  additional  money  at  tax  time  in  1971  and  1972. 

Mr.  Lilly.  Mr.  Russell  and  Mr.  Isham  had  both  told  me  along  about 
April  of  1972,  Mr.  Russell  talked  with  Mr.  Isham  and  told  him  that 
for  the  years  1969, 1970, 1971,  in  his  political  contributions  that  he  had 
made,  even  though  he  was  contributmg  and  billing  double  the  amount 
he  contributed,  he  had  not  recovered  sufficient  moneys  to  pay  his  in- 
come tax,  and  he  was  some  $66,000 — in  excess  of  $66,000 — short  and 
lacked  that  much  money  having  enough  to  pay  the  additional  taxes 
he  had  paid  during  those  years. 

And  subsequently,  a  check  was  issued  to  him  in  1972  in  excess  of 
$66,000. 

Mr.  Weitz.  Did  he  talk  to  you  about  it  at  that  time  ? 

Mr.  Lilly.  No  ;  not  that  I  recall.  The  conversation  that  I  had  with 
him  was  about  the  particular  $66,000.  It  was  about  6  weeks  or  2  months 
ago. 

Mr.  Nicholas.  Do  you  mean  to  Stu  ? 

Mr.  Lilly.  It  was  in  your  office  [pause]  6  weeks  ago  that  I  talked 
with  him.  Bob  Isham  talked  to  me  at  the  time  about  it. 

Mr.  Weitz.  Did  Russell,  either  at  that  time  or  6  weeks  ago  or  at 
any  time,  ever  admit  to  you  that  he  knew,  or  indicate  4o  you,  that  he 
knew  this  money  was  going  for  political  purposes? 

Mr.  Lilly.  I  think  this  was  the  purpose.  He  indicated  to  me  he  had 
not  billed  us  enough  money  to  pay  for  the  political  contributions  that 
he  had  made. 

Mr.  Nicholas.  Did  he  use  that  kind  of  wording,  as  opposed  to  pay- 
ments to  you  ? 

Mr.  Lilly.  As  I  recall,  yes.  That  is  my  recollection  of  it. 

Mr.  Nicholas.  Can  we  go  off  the  record. 


5961 

[Discussion  off  tlie  record.] 

Mr.  Weitz.  Back  on  the  record. 

So  you  say  that  several  weeks  ago,  Russell  said  that  he  was  angry 
because  of  the  fuss  over  the  $66,000  he  had  received  to  cover  his  taxes 
for  the  moneys  that  he  had  given  to  you  for  political  contributions? 

Is  that  the  gist  of  it  ? 

Mr.  Lilly.  That  is  the  gist  of  it.  He  felt  rather  bitterly  or  strongly 
because  someone  would  raise  any  objection.  He  was  recovering  $66,000 
that  he  had  been  out  in  taxes  in  1970  and  1971  that  he  had  not  been 
paid  for.  Why  should  anyone  raise  a  question  or  a  point  when  he  was 
paid  $66,000  to  cover  these  taxes  ? 

Mr.  Weitz.  At  any  time  during  the  2-  or  3-year  period  of  these  trans- 
actions, did  he  ever  ask  you,  for  example,  what  the  moneys  were  going 
for? 

Mr.  Lilly.  No. 

Mr.  Weitz.  Do  you  know  whether  he  ever  asked  either  Mr.  Nelson 
or  Mr.  Isham  %vhat  types  of  purposes  these  moneys  were  going  for? 

Mr.  Lilly.  I  feel  sure  he  would  not  have  asked  Mr.  Isham ;  I  doubt 
if  he  would  have  know^n,  to  start  with,  Mr.  Isham ;  and  I  know,  he  and 
Mr.  Nelson  certainl}'  could  have  had  conversations,  but.  I  am  not 
aware.  There  were  other — OK.  I  say  that  on  one 

Mr.  Weitz.  Why  don't  we  go  into  it  ? 

It  has  come  up  in  a  few  cases,  so  why  don't  you  tell  us  about  the 
transactions  leading  up  to  the  payment  in  May  1971  of  $10,000  and 
Russell's  involvement  in  that  ? 

Mr.  Lilly.  All  right. 

In  1971,  according  to  my  notes,  I  have,  on  April  28, 1971  Jake  Jacob- 
sen  called  me  in  San  Antonio,  recjuesting  $10,(K)0  cash  for  John  Con- 
nally,  and  he  requested  I  deliver  it  to  him  for  placing  in  Connally's 
safe  deposit  box  at  Citizens'  National  Ba-nk,  and  this  is  what  I  have 
in  my  notes. 

On  May  3,  I  contacted  Stu  Russell  in  Oklahoma  City,  and  he  ad- 
vised me  he  would  make  the  cash  available  in  an  amount  of  $10,000 
as  I  requested  it,  but  that  it  was  expensive  to  AMPI  to  pay  income  tax. 
I  phoned  him  on  May  1,  and  met  with  him  personally  on  the  morning 
of  May  3  in  the  San  Antonio  office  on  possible  ways  to  get  money  with- 
out doing  it  so  costly,  set  up  dummy  procedures  accounts,  a  repair 
account,  et  cetera. 

Money  was  not  obtained  through  Stii,  and  I  did  not  reeontact  him 
after  May  3.  T  l)orrowed  the  money  in  that  inptance. 

Then,  on  May  4, 1  contacted 

Mr.  Nicholas.  Wait  a  minute. 

[Discussion  off  tlie  record.] 

Mr.  Vv^'eitz.  T>et's  go  back  on  the  record. 

Now,  when  you  met  with  him  on  the  3d,  you  discussed  with  him 
ways  in  which  you  could  recoup  the  money,  and  he  said  you  might  be 
able  to  get  it  directly  from  AMPI  for  dummy  accounts? 

Mr.  Lilly.  True. 

Mr.  Weitz.  Did  you  then  go  back  to  Nelson  and  discuss  that  pos- 
sibility? 

Mr.  Lilly.  I  went  ba^^k  and  did  discuss  it  with  Mr.  Nelson  on  the 
morning  of  May  3.  and  he  thought  about  it  for  a  while  and  said  that 
Mr.  Parr  was  coming  over,  Dave  Parr,  in  the  p.m.  on  the  feame  day ; 


5962 

tliat  he  would  talk  to  Mr.  Parr  on  this  and  make  a  decision  if  I  would 
request  the  money  from  Mr.  Russell  or  from  the  attorneys  or  if  I 
would  borrow  the  money. 

And  on  the  morning  of  May  4,  Mr.  Nelson  advised  me  to  borrow  the 
money,  the  $10,000,  and  I  did,  and  it  was  note  No.  17266  at  the  Citizens' 
National  Bank  in  Austin.  And,  of  course,  I  borrowed  the  money ;  I 
i-educed  it  to  cash ;  I  gave  it  to  Mr.  Jacobsen  in  the  bank  at  the  Citizens' 
National  Bank,  and  he  in  turn  stated  he  would  put  it  in  Connally's 
cashbox,  or  put  it  in  his  cashbox  and  hold  it  for  Connally.  I  am  not 
sure  what  he  might  have  said. 

And  Mr.  Nelson  did  not  advise  me  as  to  how  to  recover  the  money, 
but  did  further  state  that  the  money  was  recovered  through  the  attor- 
neys' scheme  procedure. 

Mr.  Weitz.  Not  necessarily  Mr.  Russell  ? 

Mr.  Lilly.  Not  necessarily  Mr.  Russell ;  no. 

Mr.  Wbitz.  When  you  were  talking  to  Mr.  Russell  about  this,  did 
you  tell  him  the  purpose  to  which  the  money  would  be  put,  this 
$10,000? 

Mr.  Lilly.  I  do  not  know  if  I  did  or  not. 

Mr.  Weitz.  Did  he  ask  you  what  the  money  would  be  used  for? 

Mr.  Lilly.  That  I  do  not  know  either. 

Mr.  Weitz.  Now,  to  complete  this,  did  either  Mr.  Connally  or  Mr. 
Jacobsen  again  talk  to  you  about  that  transaction  ? 

Mr.  Lilly.  On  that  particular  transaction,  no.  At  a  later  date,  on 
the  October  13, 1971 

Mr.  Nicholas.  You  used  the  word  "Mr.  Connally." 

Mr.  Connally  never  did  talk  to  Bob  about 

Mr.  Lilly.  No;  Mr.  Jacobsen. 

Mr.  Nicholas.  Mr.  Jacobsen  did  this. 

Mr.  Wbitz.  Mr.  Connally  never  talked  to  you  about  that  trans- 
action ? 

Mr.  Lilly.  No  ;  he  did  not. 

Mr.  Weitz.  From  that  point  forward  to  today,  have  you  ever  talked 
to  Mr.  Connally  ? 

Mr.  Lilly.  I  have  talked  with  Mr.  Connally. 

Mr.  Weitz.  From  May  4,  1971,  to  the  present  time,  have  you  ever 
met  with  or  talked  with  John  Connally? 

Mr.  Lilly.  Not  in  a  private  conversation.  I  have  seen  him,  said 
hello,  shaken  hands  at  a  reception  or  in  the  airport,  in  passing,  I 
mean ;  but  no  conversation  since  May  4. 

But  at  a  later  date  in  1971,  Mr.  Jacobsen,  on  October  13,  called  me 
while  I  was  stopped  in  Dallas  en  route  to  Washington,  D.C.  I  was  on 
Braniff  flight  415.  He  had  called  my  San  Antonio  office;  I  checked 
into  the  office  and  got  his  call  from  Annette — ^that's  A-n-n-e-t-t-e — 
Tomisini — T-o-m-i-s-i-n-i,  Mr.  B.  W.  Bain's  secretary. 

Mr.  Weitz.  B-a-i-n  ? 

Mr.  Lilly.  B-a-i-n. 

Mrs.  Buckley,  B-u-c-k-1-e-y,  answered  my  call.  This  was  when  I 
called  Mr.  Jacobsen,  and  she  was  Mr.  Jacobsen's  secretary,  and  said 
that  Mr.  Jacobsen  was  in  his  office.  It  was  about  12:45  p.m. 

He  informed  me  he  was  going  to  Washington,  D.C,  soon  and 
wanted  to  tell  Mr.  Connally  that  we  would  have  another  $5,000  for 
him  in  cash,  and  have  it  in  "Jake's  safety  deposit  box  at  the  Citizens' 
National  Bank  in  Austin  in  a  short  time." 


5963 

And  I  told  him  OK,  he  could  tell  Mr.  Connally  that. 

On  November  10, 1  went  to  Austin  and  I  bad  a  check  from  Mr.  Stu 
Russell  for  $5,000,  and  this  was  cashed,  reduced  to  cash.  And  in  the 
presence  of  Mr.  Joe  Long,  Mr.  Jacobsen's  law  partner,  I  delivered 
it  to  tlieir  law  office  and  gave  the  money  to  Mr.  Jacobsen. 

It  was  in  an  envelope.  I  did  not  count  the  money  out.  I  just  handed 
him  the  envelope.  And  he  left  at  about  11 :45  on  November  10  to  go 
to  the  bank  to  put  it  in  the  safe  deposit  box. 

Mr.  Weitz.  Now,  that  same  day,  did  you  also  have  an  occasion  to 
see  Mr.  Jacobsen  earlier  in  the  day  ? 

Mr.  Lilly.  Yes ;  as  I  arrived  in  Austin — and  I  had  flown  to  Austin 
from  San  Antonio —  I  went  into  the  airport  and  I  ran  into  Mr. 
Jacobsen.  I  also  ran  into  Mr.  Tom  Townsend,  an  AMPI  employee, 
Mr.  Dave  Parr,  an  xiMPI  employee ;  and  Mr.  Joe  Long,  Mr.  Jacobsen's 
partner,  came  in  a  little  later. 

Mr.  Weitz.  Where  were  they  meeting  ? 

Mr.  Lilly.  They  were  meeting  in  the  coffee  shop.  The  Austin  Airport 
is  so  arranged  that  you  see  the  coffee  shop  when  you  go  into  it,  and 
they  spoke  to  me,  and  I  walked  in. 

Mr.  Jacobsen  handed  Mr.  Parr  an  envelope  and  said,  "this  is  $5,000 
for  Mills."  There  was  no  money  counted  at  the  time,  but  it  was  in 
an  envelope,  and  he  did  give  it  to  him  at  the  time.  This  was  about 
9  o'clock. 

And  then  an  hour  or  ly?  hours  later,  I  was  in  Mr.  Jacobsen's  office, 
delivering  him  $5,000  cash,  the  proceeds  of  the  Stu  Russell  check. 
And  if  I  am  not  mistaken,  that  Stu  Russell  check  on  that  particular 
date  was  made  out  to  cash  and  possibly  endorsed  by  Mr.  Russell,  or 
maybe  endorsed  by  me.  It  was  Novemlier  10,  1971. 

Mr,  Weitz.  Did  you  ask  Mr.  Jacobsen  wlien  you  gave  him  the  $5,000 
later  in  the  day,  whether  it  had  any  connection  with  the  earlier  $5,000? 

Mr.  I^iLLY.  No. 

Mr.  Weitz.  How  did  you  know  the  earlier  money  was,  in  fact, 
$5,000? 

Mr.  Lilly.  Only  what  he  said:  "Here  is  the  $5,000  for  Wilbur 
Mills,"  in  my  presence,  Tom  Tov.-nsend's  presence. 

Mr.  Weitz.  Had  you  provided,  except  on  these  two  occasions,  other 
monej'S  to  Mr.  Jacobsen,  other  cash  ? 

Mr.  Lilly.  No ;  these  were  the  only  two  occasions. 

Mr.  Weitz.  Now,  do  you  know  of  a  check  that  was  drawn  by  Stu 
Russell  to  cash  on  or  around  October  10 — no ;  T  am  sorry,  November  10? 

Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Weitz.  Back  on  the  record. 

Mr.  Lilly.  I  have  a  check,  a  Xeroxed  copy  of  a  check,  No.  765, 
signed  by  Mr.  Stuart  Russell,  and  it  is  made  out  to  cash,  dated  Novem- 
ber 3,  1071,  in  the  amount  of  $5,000.  That  check  is  endorsed,  "Stuart 
Russell,"  and  I  recognize  that.  It  certainly  appears  to  be  Mr.  Russell's 
signature. 

And  this  particular  check  was  handled  ]>y  me  through  the  Citizens' 
Bank  and  reduced  to  cash.  And  this  is  where  I  derived  the  cash  to 
give  to  Mr.  Jacobsen  on  the  10th  of  November. 

Mr.  Weitz.  That  is  check  No.  765  ? 

Mr.  Lilly.  No.  765. 


5964 

Mr.  Weitz.  ok. 

Is  this  a  copy  of  that  check  ? 

Mr.  Lilly.  Yes ;  it  is. 

Mr.  Weitz.  All  right. 

We  will  mark  that  as  exhibit  23. 

[Whereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No.  23  for  identification.*] 

Mr.  Weitz.  These  notes  at  the  bottom  of  exhibit  23  are  your  notes  ? 

Mr,  Lilly.  These  notes  were  made  by  Mr.  Nicholas  fairly  recently. 

Mr.  Nicholas.  Let  me  read  you  those  notes. 

Mr.  Weitz.  I  would  rather  Mr.  Lilly  read  the  notes. 

Mr.  Nicholas.  You  can't  read  them  off  that.  Use  the  original. 

Mr.  Lilly.  The  notes  at  the  bottom  that  were  made  by  Mr.  Nicholas 
refer  back  to  November  10,  1971,  the  date  we  are  referring  to,  when 
this  check  was  cashed. 

Citizens  National  Bank,  Austin,  cashed  this  $5,000  check  and  took  cash  to 
Jake  Jacobsen  at  his  law  office  and  gave  him  the  money  in  the  presence  of  Joe 
Long.  Jake  requested  the  money  earlier  in  October  1970  and  said  Jake  left  for 
bank  at  11 :45  a.m.  to  put  in  his  safety  box  at  Citizens  Bank  to  hold  for  Connally. 

Mr.  Weitz.  Do  those  notes  accurately  reflect  your  recollection  of  the 
events  ? 

Mr.  L1L1.Y.  Yes,  they  do. 

Mr.  Weitz.  All  right. 

Then  they  will  be  included  in  the  exhibit. 

Mr.  Nicholas.  So  that  will  be  clear,  that  is  what  Mr.  Lilly  told  me, 
his  lawyer. 

Mr.  IVeitz.  But  he  has  read  it  into  the  record,  and  he  says  that 
refreshes  his  recollection.  It  is  accurate  to  those  events  as  best  he  can 
recollect  it. 

Now,  of  the  Stu  Russell  checks  that  we  have,  there  are  two  checks 
in  addition  to  that,  and  they  are  also  in  cash,  one  on  Octol>er  5,  1971, 
one  December  14,  1971,  both  signed  by  Jane  Hart,  one  in  the  amount 
of  $4,000,  one  in  the  amount  of  $5,000.  ^ 

Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Weitz.  On  the  record. 

Mr.  Lilly.  Earlier  I  was  reading  notes  that  Mr.  Nicholas  had  made. 
It  should  read  October  1971  instead  of  October  1970. 

Mr.  WEriv.»That  would  be  on  exhibit  23  ? 

Mr.  Lilly.  On  exhibit  23. 

Mr.  Weitz.  With  regard  to  the  two  checks  that  I  have  just  men- 
tioned, would  you  take  a  look  at  them  and  see  if  either  of  them  has  any 
significance  to  you  ? 

Do  you  know  what  transactions  tl^ey  represent  ? 

Mr.' Lilly.  On  the  check  No.  847,  dated  December  14, 1971,  for  $5,000 
cash,  Jane  Hart  endorsed  the  check.  This  is  Mr.  Russell's  secretary. 
I  had  closed  out  the  bank  account  in  Austin,  Tex.,  and  in  some  notes, 
I  had  already  informed  Mr.  Nicholas  that  I  have  no  knowledge  of  this 
at  all.  It  is  a  total  blank  to  me ;  I  do  not  know  what  it  is  for. 

On  the  October  5,  1071  [pause].  I  have  a  payment  to  the  Citizens 
National  Bank.  The  source  of  the  money,  according  to  my  records 

Mr.  Weitz.  Exhibit  6. 

♦See  p.  6042. 


5965 

Mr.  Lilly  [continuing].  On  deposits,  that  this  was  deposited.  It 
says:  "Cash  payments  on  note,  $4,000,  Stuart  Russell,  October  8, 
1970." 

So  I  assume  that  the  check  went  directly  to  pay  on  the  note  from 
the  note  that  I  have  here  and  was  not  deposited  in  the  bank. 

Mr.  Weitz.  Thank  you. 

We  will  enter  that  as  exhibit  24. 

[Whereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No.  24  for  the  identification.*] 

Mr.  WErrz.  Off  the  record. 

[Discussion  off  the  record.] 

Mr,  WErrz.  Back  on  the  record. 

Mr.  Lilly,  I  would  like  to  ask  you  about  the  other  individuals  men- 
tioned on  the  exhibit  2  as  perhaps  being  involved  in  the  repayment 
plan. 

In  regard  to  Jim  Jones,  your  exhibit  6  shows  him  having  made  two 
checks  to  you  in  the  amount  of  $5,000  each,  one  that  you  deposited  on 
December  31, 1969,  and  another  that  you  deposited  on  May  6, 1970. 

Now,  with  regard  to  these  payments,  or  the  preparations  for  these 
payments,  do  you  remember  any  contact  directly  with  Mr.  Jones  or 
any  accounts  given  to  you  of  his  knowledge  of  these  transactions? 

Mr.  Lilly.  No,  I  do  not.  He  was  an  employee  at  the  time,  and  it  is 
quite  possible  that  Mr,  Isham  could  have  talked  with  him.  According 
to  this,  Mr.  DeVier  Pierson — exhibit  2 — Mr,  Pierson  was  to  contact 
him,  and  it  is  so  indicated  on  this  by  Mr.  Isham.  I  do  not  know  that 
to  be  true,  but  I  did  not  contact  him.. 

Mr.  Weitz.  Did  you  have  any  personal  contact  with  him  in  connec- 
tion rwith  receiving  these  two  checks? 

Mr.  Lilly.  No.  They  were  mailed  to  me,  and  I  received  them  and 
they  were  deposited. 

Mr.  Weitz.  And  he  did  not  talk  to  you  either  before  or  after  sending 
you  the  checks? 

Mr.  Lilly.  Not  that  I  remember  at  all. 

Mr.  Weitz.  So  you  have  no  personal  knowledge  or  secondhand 
knowledge,  except  his  being  listed  on  exhibit  2,  of  having  known  about 
or  participated  in  those  transactions? 

Mr.  Lilly.  No.  That  is  true.  I  received  his  checks  and  they  were 
deposited,  so  that  is  my  total  knowledge  of  it. 

Mr.  Weitz.  Do  you  know  whether  there  was  any  additional  moneys 
paid  to  him  above  this  retainer  ? 

Mr.  Lilly.  If  so,  I  did  not  see  the  bill  or  handle  the  bill. 

Mr.  Weitz.  Was  he  the  only  employee  ultimately  to  have  parti^i 
pated  directly  in  this  conduit  system  ? 

Mr.  Lilly.  Well,  he  was  on  the  payroll  as  an  employee.  The  others 
were  on  the  payroll  as  retainer  fees.  I  do  not  know  how  you  distir^ 
guish  the  difference.  There  is  a  difference,  I  am  sure. 

Mr.  Weitz.  Was  he  a  full-time  employee  of  the  company  ? 

Mr.  Lilly.  A  full-time  employee  on  a  stipulated  annual  salary. 

Mr.  Weitz.  And  he  had  no  other  employment  to  your  knowledge  ? 

Mr.  Lilly.  Yes.  He  and  his  wife  were  both  attorneys  and  practicing 
law  in  Tulsa. 

♦See  p.  6043. 


5966 

Mr.  WErrz.  So,  in  effect,  the  pajTnents  that  he  would  receive  may 
not  have  been  very  much  different  than  other  attorneys  on  a  retainer 
fee  basis? 

Mr.  Lilly.  The  only  difference  being  he  was  charged  with  the  respon- 
sibilit}'  of  putting  our  publication  together,  and  this  falls  generally 
outside  an  attorney's  role,  I  think.  So  in  that  sense  I  would  say  he 
would  be  an  employee,  at  least  to  my  way  of  thinking. 

Mr.  Wettz.  Did  your  decision  to  make  political  contributions,  to 
have  TAPE  make  political  contributions,  to  Jones  in  1970 — was  that 
in  any  way  related  to  his  participation  in  this  conduit  scheme? 

Mr.  Liij^y.  No.  This  was  totally  separate,  apart,  and  independent. 
This  was  a  decision  that  I  made  to  contribute  to  him. 

Mr.  WErrz.  OK. 

Off  the  record. 

[Discussion  off  the  record.] 

Mr,  Weitz.  On  the  record. 

Mr.  Lilly,  with  regard  to  a  check  dated  August  27.  1970,  in  the 
amount  of  $10,000  from  Stuart  Russell  to  you,  endorsed  by  you  and 
Joe  Nigrelle,  JsT-i-g-r-e-l-l-e,  which  I  Aviil  mark  as  exhibit  25,  would 
you  please  identify  this  and  tell  us  what  you  know  about  that 
transaction  ? 

["VN^iereupon,  the  documc^nt  referred  to  was  marked  Lilly  exhibit 
No.  25.  for  identification.*] 

Mr.  Lilly.  Yes,  This  was  a  check  that  Mr.  Russell  sent  to  me  at  my 
request,  and  the  money — it  was  reduced  to  cash  in  San  Antonio.  I  do 
not  bank  in  San  Antonio,  and,  consequently,  Mr.  Nigrelle  did,  and  that 
is  why  his  signature  appears  on  this.  He  helped  me  reduce  this  check 
to  cash.  It  went  to  Arkansas. 

Mr.  Dave  Parr  requested  the  check.  He  indicated  to  me  that  Mr. 
Phil  Campbell,  who  is  Tender  Secretary  of  Agriculture  now  and  was 
at  that  time,  had  made  this  request. 

jMr.  Parr  asked  me  to  delivei-  $10,000  to  Atlanta.  I  was  to  contact 
Mr.  Howard  Calloway,  who  apparently  was  the  campaign  manager, 
or  had  something  to  do  with  ^Ir.  Bentley's  gubernatorial  race.  But. 
further.  T  was  given  the  names  of  Larry  Sizemore,  S-i-z-e-m-o-r-e-, 
and  Terry,  T-e-r-r-y,  ISfcKenna,  M-c-K-e-n-n-a,  with  a  telephone 
number  of  area  code  404-521-2268  in  Atlanta,  and  I  was  to  contact 
them  about  delivery  of  this  $10,000. 

I  did  contact  them.  I  did  make  the  delivery  on  the  9th  and  2d 
of  1070  at  the  Atlanta  airport,  to  Mr.  Sizem.ore  and  Mr.  IMcKenna 
and  have  a  card  signed,  "Receij)t  acknowledged,  Mr.  McKenna." 

Mr.  Weitz.  Mr.  Lilly,  did  Mr.  Parr  tell  you  anything  further  about 
the  request  from  Campbell? 

Mr.  Lilly.  No.  I  checked  with  Mr.  Nelson.  I  told  him  I  had  this 
request  from  Mv.  Parr,  and  should  T  go  through  with  it.  Mr.  Nelson 
told  me  that  T  should  go  tlirough  with  it  and  carrv  out  this  partic- 
ular thing,  and  it  was  can-ied  out.  I  mean,  this  is  all  of  the  informa- 
tion I  have  on  it. 

Mr.  Weitz.  Do  you  remember  whetlier  Mr.  Parr  told  you  Avhether 
he  had  made  a  commitment  voluntarily  or  whether  Mr.  Cnmpbcll 
had  initiated  the  request? 

*Spp  p.  fin44. 


5967 

Mr.  Lilly.  His  conversation  with  nie  was  that  Mr.  Campbell  had 
requested  that  we  make  such  a  contribution. 

Mr.  Weitz.  And  Mr.  Parr  agreed  ? 

Mr.  Lilly.  Well,  evidently  so,  because  he  called  me  and  asked  me 
to  do  it. 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 

i\Ir.  Weitz.  Back  on  the  record. 

Exhibit  6  indicates  that  Frank  Masters  made  payments  totaling 
$6,000  to  you  on  three  separate  occasions. 

Do  you  recall  what  contacts  that  you  had  with  him  and  what  you 
told  him  about  those  transactions? 

Mr.  Lilly.  I  contacted  Mr.  ISIasters  and  told  him  that  I  needed 
some  political  contributions,  and  that  I  was  exj)ecting  him  to  make 
a   political  contribution,  and  he  did  make  a  political  contribution. 

I  might  say  that  I  had  to  prod  him  a  time  or  two,  and  he  did  make 
the  contributions,  scattered  out  over  a  period  of  time.  In  my  records, 
the  record,  exhibit  6,  indicates  with  the  first  deposit  having  been 
made  early  in — at  the  beginning  of  the  $100,000  note,  and  in  Septem- 
ber of  1970  and  October  or  thereabouts  of  1970. 

Mr.  Masters  did  deliver  cash  to  me.  He  did  not  talk  to  me  about 
it.  He  went  ahead  and  gave  me  the  money,  and,  to  my  knowledge,  he 
did  not  bill  AMPI. 

Mr.  Weitz.  Did  you  tell  him  what  the  payments  were  for? 

Mr.  Lilly.  No. 

Mr.  Weitz.  And  he  never  asked  ? 

Mr.  Lilly.  He  said,  "Do  you  have  to?" 

And  I  said :  "Yes,  sir.  If  you  don't  believe  me,  talk  to  Mr.  Nelson." 

Mr.  Weitz.  Did  you  tell  him  they  were  going  to  any  State  candi- 
dates or  going  to  Austin  or  anything  like  that  ? 

Mr.  Lilly.  As  I  recall  it,  I  just  told  him  they  were  political  con- 
tributions, I  needed  some  help  from  him. 

Mr.  Weitz.  Did  he  ask  any  questions? 

Mr.  Lilly.  No  ;  not  that  I  recall. 

Mr.  Weitz.  To  your  knowledge,  he  was  never  reimbursed  from 
AMPI? 

Mr.  Lilly.  To  my  knowledge,  he  was  never  reimbursed. 

Mr.  Weitz.  Did  you  tell  him  he  could  be  reimbursed  ? 

Mr.  Lilly.  No  :  I  did  not  say  that  he  could  or  could  not.  I  told  him 
Avhat  I  needed. 

Mr,  Weitz.  Had  he  talked  to  Nelson  beforehand  ? 

Mr.  Lilly.  I  feel  that  he  had.  yes.  I  do  not  know  this.  I  do  not  think 
Mr.  Isham  talked  to  him ;  I  think  Mr.  Nelson. 

The  reason  I  say  that  is  because  Mr.  Nelson  and  Mr.  Masters  have 
been  close,  have  been  acquainted  or  worked  together  for  a  number  of 
years,  and  they  have  a  close  relationship. 

Mr.  Weitz.  Had  you  told  any  of  the  others  ? 

For  example,  I  think  I  forgot  to  ask  you — did  you  tell  Jones  that 
he  could  be  reimbursed  or  should  be  reimbureed  ? 

Mr.  Lilly.  No,  I  had  not  contacted  Jones. 

Mr.  Weitz.  So  you  do  not  know  what  was  told  to  him  ? 

Mr.  Lilly.  I  do  not  know  what  was  told  to  him. 


5968 

IVfr.  Wkitz.  Had  you  ever  told  Jacobsen  or  Russell  or  anyone  else 
they  could  be  reimbursed  ? 

Mr.  Lilly.  I  do  not  remember  tellinjj  anyone  that  they  could  be 
reimbursed  on  any  of  these  checks.  I  told  them  what  I  needed.  I  felt 
that  they  knew  that  they  could  be  reimbursed.  It  was  quite  obvious, 
because  IjiUs  were  coming  in. 

Mr.  Nicholas.  May  I  ask  him  a  question  on  that  ? 

Mr.  Weitz.  [Nods  in  the  affirmative.] 

Mr.  Nicholas.  On  the  Frank  Masters  thing,  do  you  know  from  your 
own  knowledge  whether  or  not  Frank  Masters  and  Harold  Nelson 
had  a  falling  out  in  1968  over  the  antitrust  suits  and  the  business  that 
Masters  was  not  getting  from  Nelson — listen  to  the  whole  question, 
now — or  do  you  know  about  it  ? 

Mr.  Lilly.  I  know  a  little  bit  about  the  backlash  of  it,  but  I  really 
don't  know  too  much  about  it. 

Mr.  Nicholas.  The  question  I  am  asking  you  is  this :  Do  you  know, 
from  knowing  Frank  Masters  and  from  knowing  Harold  Nelson,  that 
at  some  time  in  tlie  year  10(i8,  Masters  and  Nelson  had  a  fallino;  out 
because  Nelson  was  retaining  other  lawyers  in  the  lucrative  antitrust 
litigation  and  leaving  out  Masters? 

Mr.  Lilly.  That  T  know. 

Mr.  NiCHOiiAs.  That  is  correct? 

Mr.  Ln.LY.  That  is  correct. 

Mr.  Nicholas.  So  would  it  be  likolv  that  Masters  would  liave  con- 
sulted with  Nelson  about  these  kickbacks  or  schemes  to  pay  back 
moneys  ? 

Mr.  Lilly.  Probably  not,  because  they  were  not  speaking  to  each 
other,  truthfully.  T  do  know  that  Masters  made  some  board  meetings 
and  went  through  the  entire  board  meeting  without  a  word  passing 
between  the  two  of  them.  It  went  on  for  some  time,  so  possibly  not. 

Mr.  Nicholas.  Is  Masters,  in  fact,  still  working  on  a  retainer  fee 
basis  for  AMPI? 

Mr.  Lilly.  T  think  he  works  on  a — not  on  a  retainer  basis. 

Mr.  Nicholas.  On  a  time  basis  ? 

Mr.  Lilly.  But  on  a  time  basis.  He  does  do  some  work. 

Hut  I  would  like  to  clarify;  you  asked  me  just  a  moment  ago  if  I 
told  any  of  these  attorneys — I  mean,  I  do  not  recall ;  it  is  possible,  but 
I  certainly  do  not  recall,  except  some  of  the  conversations  that  I  have 
already  related  that  I  had  with  Stu  Ilussell. 

Mr.  Weitz.  All  right. 

With  resrard  to  Richard  Maeuire,  exhibit  6  indicates  that  four 
payments  in  the  amount  of  $10,000  were  made  from  Maguire  to  you. 

Can  you  tell  us  anything  about  those  transactions? 

Mr.  Lilly.  Yes ;  I  can. 

On  the  transactions,  the  $5,000  transaction  that  occurred  on  or 
about  October  5,  if  I  am  correctly  reading  across  the  lines,  I  came 
to  Washington.  I  believe  that  was  October  30,  1970. 

My  notes  indicate  that  I  have — I  picked  up  $5,000  cash  from 
Maguire  in  Washington,  D.C.  The  other  money,  insofar  as  I  know, 
most  of  the  money  from  Maguire  I  would  pick  up  at  the  same  time 
that  I  would  pick  up  moneys  from  Cliff  Carter. 

He  would  deliver  it  to  me,  or  I  would  pick  up  from  Cliif.  This 
might  have  been  Austin,  Tex.,  Kerrville,  Tex.  I  remember  these  were 


5969 

two  of  the  places  that  I  met  Cliff  Carter  at  one  time  or  another.  He 
would  usually  have  some  money  from  Maguire  and  this  is  the  way 
I  got  a  portion  of  the  money  from  Maguire. 

Mr.  Weitz.  So  on  those  occasions  you  dealt  just  with  Carter? 

Mr.  Lilly.  That  is  true.  I  dealt  with  Carter. 

Mr.  Weitz.  Did  he  tell  you  what  he  was  telling  Maguire  about 
those  moneys  ? 

Mr.   Lilly.   He  didn't  tell   me  anything. 

Mr.  Weitz.  In  the  billings  which  we  have  from  Maguire  to  AMPI, 
it  indicates  that  his  retainer  was  increased  in  January  of  1970  from 
$2,500  a  month  to  $4,000  a  month. 

Are  you  aware  of  the  background  of  why  his  retainer  was  increased  ? 

Mr.  Lilly.  No;  I  am  not.  It  corresponded  very  closely  to  the  time 
some  of  these  moneys  started  coming  in. 

Mr.  Weitz.  With  regard  to  Cliff  Carter,  there  are  five  transactions 
indicated  in  exhibit  6  involving  moneys  from  him  to  you  in  the  total 
amount  of  $10,000. 

Can  you  tell  us  about  those  transactions  ? 

Did  you  deal  directly  ?  You  apparently  dealt  directly  with  Carter. 

Mr,  Lilly.  Directly,  as  far  as  receiving  moneys. 

Cliff  Carter  would  call  me  at  San  Antonio,  or  through  some  way  or 
the  other  meet  me  in  Austin,  Tex.,  or  Kerrville,  and  tell  me  he  was 
coming  that  way,  or  call  me  if  I  happened  to  be  coming  to  Washing- 
ton and  he  would  make  an  arrangement  to  meet  me  somewhere  in 
Washington,  D.C.  I  never  met  him  in  his  office. 

And  he  would  deliver  some  money  to  me,  and  say,  "In  the  envelope 
is  $2,500,  $1,500,  $1,000  from  Maguire,"  and  that  would  be  the 
conversation. 

Mr.  Weitz.  Did  he  know  what  purposes  the  moneys  were  going 
to? 

Mr.  Lilly.  Insofar  as  I  know  I  did  not  tell  him,  and  I  did  not  con- 
tact him.  I  did  not  know  Cliff  Carter  that  well. 

Mr.  Weitz.  "Who  did  know  him  well  at  the  company  ? 

Mr.  Lilly.  At  the  company  I  am  not  really  sure  that  anyone  knew 
him  that  closely.  I  would  think  this  would  be  an  indicator  that  DeVier 
Pierson  contacted  him,  and  it  seems  that  that  probably  did  happen, 
that  DeVier  talked  to  him. 

Mr.  Weitz.  I  think  you  mentioned  earlier  that,  in  some  connection. 
Bob  Justice  might  have  picked  up  some  money  from  Maguire  and/or 
Carter. 

Can  you  tell  us  about  that  transaction  ?  [Pause.] 

[Discussion  off  the  record.] 

Mr.  Weitz.  Let's  go  on  the  record. 

Mr.  Lilly.  Cliff  Carter  called  me  at  a  date — I  will  have  to  check  my 
notes  out  to  determine  when — and  told  me  that  Bob  Justice, 
J-u-s-t-i-c-e,  an  AMPI  employee  of  Mr.  Dave  Parr's  from  Little 
Rock,  Ark.,  was  in  Washington  and  had  been  to  his  office  asking  him 
for  money.  And  also  he  had  asked  Mr.  Maguire,  Dick  Maguire,  for 
some  cash. 

Mr.  Carter,  wanted  to  know  if  I  knew  Mr.  Justice  was  in  town,  and 
I  told  him,  no.  And  he  wanted  to  know  if  he  had  authority  to  do  it. 
I  told  him  this  was  not  my  decision  to  make  as  to  whether  he  did  or 
did  not. 


5970 

At  any  rate,  Mr.  Carter  told  me  that — well,  he  called  me  back  and 
told  me  later  that  he  had  given  Mr.  Justice — and  as  my  memory  serves 
me  now,  without  referring  back  to  my  notes,  I  can't  locate — it  was 
$2,500.  And  the  money  later  went  into  the  campaign  of  Senator 
Humphrey.  And  this  would  have  been  when  he  was  running  for  Sena- 
tor in  1970. 

Mr.  Weitz.  Did  he  indicate  that  any  money  was  given  from  Maguire 
or  on  behalf  of  Maguire  ? 

Mr.  Lilly.  Mr.  Carter  indicated  to  me  that  Maguire  was  quite  upset 
because  Bob  Justice  or  someone  he  didn't  know  had  walked  into  his 
office  and  was  asking  for  cash.  So  Mr.  Maguire  did  not  give  him  the 
money.  As  a  matter  of  fact,  Cliff  Carter  said  he  had  given  the  money. 
He  was  acting  for  both  Maguire  and  Cliff  Carter. 

IVIr.  Weftz.  And  the  bast  you  can  recall,  that  was  the  total,  $2,500? 

Mr.  Lilly.  That  is  right. 

Mr.  Weitz.  '\^niat  connection  did  either  Carter  or — I  am  sorry — 
Justice  or  Parr  have  with  the  Humphrey  campaign  at  that  point? 

Mr.  Lilly.  Well,  Bob  Justice  had  been  employed — he  had  worked 
for  one  of  the  Governore  of  Arkansas,  and  Mr.  Parr  had  employed  Mr. 
Justice  in  a  political  capacity.  And  I  believe  along  in  1968, 1  was  first 
working  with  him  in  1968,  in  a  political  campaign. 

I  remember  that  I  did  send  Mr.  Justice  back  home  and  have  Mr.  Parr 
furiously  on  me  for  the  rest  of  my  days  while  he  continued  to  work 
for  AMPI,  because  Bob  Justice  was,  to  my  own  personal  knowledge, 
not  very  astute,  very  capable,  ver}'  qualified,  so  I  sent  him  back  home. 
And  Mr.  Parr  made  me  send  him  back,  so  T  did  not  work  with  him. 

And  he  raised  moneys.  And  I  can  find  other  tracks  at  other  places 
where  Bob  Justice  had  been  in  getting  some  money  for  one  reason  or 
the  other. 

At  one  time.  T  worked  for  Pat  Hillings'  campaign  in  California,  in 
a  special  election.  Bob  Justice  showed  up  out  there  in  California. 
Various  other  places,  Bob  Justice  would  show  up. 

I  never  really  knew  what  capacity  he  might  have  served  in,  but  he 
did  raise  some  moneys.  I  am  not  sure  who  the  moneys  went  to.  In  this 
one  instance,  I  believe  that  they  did  go  to  Humphrey,  but  I  will  have 
to  check  my  notes. 

I  do  not  know  how  much  moneys,  nor  where  he  collected  moneys,  but 
I  am  sure  there  was  some  money  collected  and  spent  at  some  place  by 
Bob  Justice. 

Mr.  Sanders.  What  I  would  really  like  to  know  is  how  you  learned 
that  his  money  went  to  tht^  Humphrey  campaign  ? 

Mr.  Lilly.  In  this  particular  instance — this  is  why  I  need  to  find 
my  notes,  and  I  will  find  them— because  the  money  was  given  to  me, 
it  was  sent  to  me  by  Bob  Justice,  and  I  in  tui-n  delivered  it  or  mailed 
it  to  Jack  Chestnut,  I  believe,  who  was  the  campaign  manager  for  Sen- 
ator Humphrey, 

Mr.  Sanders.  There  is  a  note  of  that  on  your  chronology,  right? 

Mr.  Lilly.  No. 

Mr.  Sanders.  Yes ;  there  is. 

Mr.  Lilly.  Jack  Chestnut,  yes;  but  this  is  other  money  that  I  am 
personally  aware  of.  I  am  talking  about  some  money  from  Bob  Justice. 

Mr.  Sanders.  Justice  gave  this,  perhaps  $2,500.  to  you  ? 

Mr.  Lilly.  And  I  delivered  it. 


5971 

Mr.  Sanders.  To  Chestnut  ? 

Mr.  Lilly.  Right. 
Mr.  Nicholas.  In  cash  or  check  ? 

Mr.  Lilly.  I  will  have  to  look  at  my  notes.  Now  I  cannot  recall.  I 
do  have  the  information. 

Mr.  Weitz.  Do  you  know  whether  Carter  was  reimbursed  from 
AMPI? 

Mr.  Lilly.  This  I  do  not  know.  If  he  was  reimbursed,  I  do  not  know 
what  he  was  told,  why  the  money  was  needed.  I  do  not  know  if  this  was 
the  only  occasion  in  which  Bob  Justice  might  have  gone  to  him  for 
money  or  not. 

Mr.  Sanders.  Did  you  say  you  cannot  remember  whether  you  hand 
delivered  it  to  Chestnut  or  mailed  it  ? 

Mr.  Lilly.  The  reason  I  cannot  is  because — if  I  could  find  my  notes — 
it  was  reduced  to  a  check,  a  cashier's  check,  which  it  seems  for  some 
reason  it  was.  I  would  have  mailed  it  rather  than — unless  I  had  a  reason 
to  go  to  Minneapolis,  I  would  have  mailed  it.  And  certainly  if  it  was 
cash  I  would  not  have  mailed  it ;  it  would  have  been  hand  delivered. 
And  that  is  why 

Mr.  Sanders.  Do  you  want  to  take  another  few  minutes  to  see  if 
you  can  find  that  ? 

Mr.  Weitz.  Let's  go  off  the  i-ecord. 

[Discussion  off  the  record.] 

Mr.  Weitz.  Let's  go  back  on  the  record. 

Upon  reviewing  your  notes,  now,  Mr.  Lilly,  can  you  tell  us — do  you 
recall  what  transpired  with  the  moneys  that  Justice  apparently  col- 
lected from  Mr.  Carter  ? 

Mr.  Lilly.  I^t  me  read  from  my  notes,  dated  May  15,  1970,  and 
they  state,  "Cliff  Carter  told  me  he  gave  Bob  Justice  $1,500  in  D.C."— 
in  parentheses,  I  have  "cash" — "Carter  also  stated  Justice  saw 
Maguire" — meaning  Dick  Maguire — "to  get  $750,  but  Carter  gave 
$1,500." 

I  would  assume  from  that  he  was  trying  to  get  $750  from  each  of 
them.  And  this  is  all  of  the  notes  that  I  have  regarding  that 
transaction. 

Mr.  Weitz.  So,  at  this  point,  you  cannot  identify  what,  in  fact,  did 
happen  to  that  $1,500? 

Mr.  Lilly.  No,  I  cannot. 

Mr.  Weitz.  And  it  was  not  given  to  you,  to  the  best  of  your 
recollection  ? 

Mr.  Lilly.  To  the  best  of  my  recollection.  I  have  no  note  of  it. 

Mr.  Nicholas.  But  in  the  event  we  can  locate — and  when  we  go 
through  the  other  notes  that  we  have — if  we  can  locate  this  transaction, 
we  would  like  to  have  the  right  to  send  it  to  you  and  attach  it  to 
the  record. 

Mr.  Weitz.  Of  course. 

Now,  with  regard  to  DeVier  Pierson,  he  is  identified  by  you  as 
apparently  having  assisted  in  the  determination  of  who  would  be  con- 
tacted to  repay  the  loan  to  you. 

Did  you  have  any  direct  contact  with  him,  either  with  regard  to 
the  setting  up  of  the  program  or  receiving  funds  from  him  ? 

Mr.  Lilly.  Not  in  setting  up  a  program ;  no.  I  do  not  recall  talking 
with  DeVier  Pierson,  even  though  it  was  not  uncommon  for  me  to 


5972 

visit  with  DeVier  quite  often,  over  the  phone  or  in  person.  But  in 
this  particular  instance.  I  had  not}iin<i'  to  do.  that  I  can  recall. 

But  DeVier  Pierson  did  fund  some — my  records  indicate  that  I  have 
a  $5,000— on  February  2,  1970,  I  have  $5,000  from  DeVier  Pierson, 
and  I  also  have  on  exhibit  6  unidentified  payments  on  February  2, 
1970,  imder  "note  transactions,"  of  that  particular  numbered  instru- 
ment. This  possibly  could  be  money  that  could  have  come  from 
Ma^uire — I  mean,  DeVier  Piei-son. 

Mr.  Weitz.  Let  me  ask  you  this. 

Would  this  February  2,  1970,  payment  from  Pierson  be  part  of  the 
$15,000  which  is  indicated  as  a  curtailment  of  the  note,  the  $100,000 
note,  on  that  date? 

Mr.  Nicholas.  Ask  that  question  again,  Alan. 

Mr.  Weitz.  Is  the  $5,000  cash  payment  from  DeVier  Pierson  on 
February  2,  1970 — did  that  go  toward  the  $15,000  curtailment  which 
is  indicated  on  the  $100,000  note,  a  copy  of  which  we  have  as  exhibit  3  ? 

Mr.  Lilly.  It  is  quite  possible.  I  notice  I  do  have  a  notation  on  the 
third  page  of  that  under  deposits  where  cash  payments  were  made 
on  the  note.  I  have  $5,000  being  paid  on  February  2,  1970,  reflecting 
it  came  f I'om  DeVier  Pierson. 

Mr.  Weitz.  Let  me  ask  you  this.  The  records  I  looked  at,  such  as 
the  note  or  your  deposit  slips,  do  not  indicate  DeVier  Pierson's  name. 

Can  you  tell  me  how  either  you  or  accountants  have  determined 
that,  in  fact,  $5,000  was  paid  from  DeVier  Pierson  for  curtailment  of 
the  note  on  that  date  ? 

Mr.  Lilly.  On  my  itinerary,  on  January  27,  1970,  the  first  page, 
down  about  midway,  "$5,000  cash,  DeVier  Pierson  paid  note  11169 
CNB,  2-2-70." 

Mr.  Weitz.  Are  those  from  your  notes  ? 

Mr.  Lilly.  These  are  from  my  original  notes,  yes. 

Mr.  Weitz.  I  see. 

Mr.  Lilly.  There  is  still  another  possibility.  In  these  payments.,  I 
have  $5,000  unidentified.  I  do  not  know  what  the  source  is.  You  find 
$5,000  unidentified,  and  I  do  not  know  the  source  of  that. 

Mr.  Weitz.  There  is  another  $5,000,  for  example,  in  your  summary, 
which  I  suppose  at  this  point  we  ought  to  enter  as  exhibit  26,  which  is 
indicated  on  January  30,  1970,  as  an  unidentified  source. 

[WTiereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No.  26,  for  identification.*] 

Mr.  Weitz.  But  that  would  be  just  3  days  after  the  earlier  payment 
from  DeVier  Pierson.  Is  it  likely  that  he  would  have  made  two  con- 
secutive payments  of  that  nature  to  you,  or  do  you  remember  two  con- 
secutive payments  from  him  ? 

Mr.  Lilly.  No,  I  do  not.  I  just  have  that  as  the  unidentified  source. 

Mr.  Weitz.  Is  that  the  only  other  imidentified  $5,000  payment? 

Mr.  Lilly.  No.  If  you  will  look  on  "Note  transactions,  unidentified," 
you  will  see  $5,000  up  near  the  top.  I  do  not  know  what  number  exhibit 
we  are  looking  at,  but 

Mr.  Weitz.  Exhibit  6,  page  2. 

Mr.  Lilly.  Then  you  will  see  $4,264,460.  Look  on  the  first  page  of 
that ;  look  way  over  to  the  righthand  side. 

♦See  p.  fi045. 


5973 

Mr.  Weitz.  Yes. 

Mr.  Lilly.  Those  payments  are  all  $9,425.  I  cannot  identify  the 
source. 

Mr.  Weitz.  But  the  $5,000  is  the  other  $5,000  that  was  used  for 
the  February  2, 1970,  curtailment  ? 

Mr.  Lilly.  Yes ;  that  is  true, 

Mr.  Weitz.  Do  you  remember  at  any  time  talking  to  Pierson  about 
these  transactions  and  the  purposes  for  which  the  money  went? 

Mr.  Lilly.  I  cannot  recall  having  talked  with  him. 

Mr.  Sanders.  Off  the  record  for  just  a  minute. 

[Discussion  off  the  record.] 

Mr.  Weitz.  Back  on  the  record. 

Mr.  Lilly,  did  you  attend  any  board  of  directors'  meetings  of  AMPI  ? 

Mr.  Lilly.  Yes ;  I  attended  most  of  the  board  meetings. 

Mr.  Weitz.  Do  you  remember  any  board  meetings  at  which  the 
question  of  high  attorney  fees  was  raised  and  discussed  ? 

Mr.  Lilly.  Yes ;  I  remember,  as  a  matter  of  fact,  two  board  meet- 
inofs.  I  can  give  vou  the  town,  but  I  cannot  give  you  the  year. 

Mr.  Weitz.  Where  were  they  held? 

Mr.  Lilly.  One  of  them  was  in  Madison,  Wis.  We  do  not  meet 
there  often ;  normally  it  is  in  October,  because  they  have  their  World 
Area  Expo,  so  I  would  assume  that  it  would  be  in  October  of  a 
year. 

And  the  other  one  was  in  Las  Vegas,  Nev.,  and  that  would  be  in 
conjunction  with  the  National  Milk  Producers  Federation's  annual 
meeting?. 

Mr.  Weitz.  These  were  two  particular  meetings  where  you  remember 
the  matters  being  discussed? 

Mr.  Lilly.  That  is  true.  And  the  matters  were  discussed  off  the 
record.  They  were  what  the  AMPI  board  refers  to  as  executive  session, 
which  means  that  there  are  no  minutes  kept.  If  there  are  any  actions 
that  have  to  be  taken,  it  is  taken  after  thev  come  out  of  their  executive 
session. 

It  was  Mr.  Nelson,  Mr.  Parr,  and  myself  and  the  AMPI  board, 
and  thev  were  questioning  high  attorney  fees,  why  and  what  they 
were  beinar  used  for.  Mr.  Parr  and  Mr.  Nelson,  for  the  most  part_, 
attempted  to  satisfy  nnd  pacify  t^^^  board  of  directors  that  this  was 
a  normal,  routine  business  operation,  and  if  we  expected  to  get  things 
done,  we  were  goinsr  to  have  high  attomev  fees. 

And  the  board  asked  how  much  of  these  fees  might  be  going  into 
political  funds,  so  there  was  an  admission  that  some  of  the  fees  were 
going  into  political  funds  to  the  board  members. 

Mr.  Weitz.  Who  asked  whether  some  of  the  fees  might  have  been 
goin.^  into  the  nolitical  funds? 

Mr.  Ltt,ly.  [Nods  in  the  neo-ative.l 

Mr.  Weitz.  One  of  the  board  members  ? 

Mr.  Lilly.  Oh,  yes.  There  were  a  number  of  board  members  in- 
volved, and  I  do  not  believe  I  could  recall  the  individual  who  asked  it. 

Mr.  Wettz.  Who  were  the  ones  that  were  active  on  this  type  of 
question  who  would  have  participated  ? 

Mr.  Lilly.  Frank  White  would  have  been  one  of  the  board  members; 
he  is  still  nn  the  AMPI  board.  Norman  Barker  would  be  another  one 
from  the  State  of  Kansas,  still  on  the  AMPI  board. 


5974 

Mr.  Wp:itz.  Would  Zimmernian  have  been  active  in  it  ? 

Mr.  Lilly.  Zimmerman  was  on  the  board  at  the  time;  he  is  no 
lono'er  on  t}>e  board.  Zimmerman  would  not  have  been  one  to  have 
pursued  the  (<"(stion. 

flack  HesLier,  H-e-s-s-e-r,  from  Oklahoma,  no  longer  on  the  board, 
but  on  the  board  at  that  time,  could  well  have  been  one  of  them. 

Mr.  Weitz,  What  was  Mr.  Nelson's  response  ? 

Mr.  Lilly.  Well,  Mr.  Nelson's  response — I  will  sum  it  up.  In  effect, 
it  was,  "Certainly,  we  have  high  attorney  fees,  and  this  is  the  way  that 
we  are  going  to  accomplish  things.  And  I  don't  think  the  board  really 
wants  to  delve  into  these  this  far,  and  the  cost  of  doing  business" — I 
don't  know  if  I'm  doing  a  fair  job  of  summing  up  Mr.  Nelson's — but 
while  there  was  no  open  admission  as  to  what  was  actually  happening, 
I  do  not  think  there  was  any  doubt  in  the  board  members'  mind  as  to 
what  was  transpiring. 

Mr.  Weitz.  IVhen  someone  said,  "Are  some  of  these  fees  going  to 
political  funds,'"  did  Mr.  Nelson  say,  "Absolutely  not,"  or  "You  are 
wrong,"  or  did  he  more  or  less  rationalize  it  away  ? 

Mr.  Lilly.  That  is  true.  He  rationalized.  I  think  all  of  them  were 
left  with  the  impression  that  some  of  the  fees  were  going  to  political 
activities.  In  fact,  that  is  why  I  was  in  the  executive  session  itself,  be- 
cause I  was  asked  myself  if  they  were. 

Mr.  Weitz.  What  did  you  say  ? 

Mr.  Lilly.  Well,  Mr.  Nelson — I  said  that  he  is  an  employee,  and  I 
am  the  general  manager,  so  you  can  ask  me  the  questions  and  T  will 
answer  the  questions.  And  that  is  where  he  rationalized  it. 

Mr.  Weitz.  At  either  of  those  board  meetings  or  any  others  that  you 
recall,  did  he  actually  use  the  word  "conduit"  ? 

Mr.  IjTlly.  That  is  quite  possible.  I  could  not  say. 

Mr.  Weitz.  Had  he  used  the  term,  do  you  think  you  would  have  been 
sufficiently  surprised  to  have  remembered  it? 

Mr.  Lilly.  No;  not  me  as  such:  I  would  not  have  been,  because  the 
term — T  understood  the  term,  and  I  would  not  have  been.  And  he  could 
well  have  used  it.  and  it  would  not  have  impressed  me. 

Mr.  Weitz.  Who,  if  any,  of  tliese — I  think  you  mentioned  Mr. 
Masters  attended  a  good  many  of  these. 

Did  he  attend  the  two  in  Las  Vegas  and  Madison  ? 

Mr.  Lilly.  I  think  so,  but  I  am  not  sure  that  he  was  present,  because 
at  the  executive  session,  they  move  those  out  except  the  employees  they 
want  to  talk  with,  and  they  would  have  looked  upon  Mr.  Masters  as  an 
employee  in  this  instance,  because  he  helped  keep  the  minutes  of  the 
AMPI  board  meeting. 

Mr.  Weitz.  Any  of  the  other  attorneys  that  we  talked  about — were 
anv  of  them  present  at  these  meetings  or  similar  meetings  ? 

Mr.  Lilly  No  :  not  that  T  remember. 

IVFr.  Wr.\r'A.  Did  Stu  Kussoll  attoTid  !inv  l>oard  meetings? 

Mr.  Lilly.  On  a  rare  occasion  he  might  if  he  happened  to  bo  in  a  city 
where  a  Federal  order  hearing  was  being  held,  and  it  was  open  that 
ni.<Tht,  he  might  drop  by  the  board  meeting. 

Mr.  Weitz.  But  you  do  not  recall  him  being  at  eitlier  of  those  ? 

Mr.  Lilly.  No  ;  not  at  either  one  of  these. 

Mr.  Weitz.  I  would  like  to  ask  you  soroe  questions  now  about  the 
milk  ])rico-support  decision  in  March  of  1971. 


5975 

Could  you  tell  us  what  contacts,  general  contacts,  were  being  made 
by  employees  and  other  representatives  of  AMPI  during  March  of 
1971  with  members  of  the  administration  and  other  political  officials? 

Mr.  Lilly.  Well,  of  course,  my  contacts  were  being  made  with  Con- 
gressmen. I  did  contact  Senators  during  that  time,  a  number  of  them, 
to  work  with  some  of  our  members,  board  members,  and  the  dairy 
farmers  who  were  not  on  the  boards  that  were  here  and  had  been 
directing  them  to  contact  their  own  Congressmen.  And  most  of  our 
efforts  were  directed  toward  Congressmen. 

At  the  same  time,  there  was  considerable  effort,  with  the  help  of 
Mr.  Marion  Harrison,  an  attorney  here  in  Washington,  who  was  more 
or  less  guiding  Mr.  Nelson  and  Mr.  Parr  to  the  various  officials  within 
the  Department  of  Agriculture.  Certainly,  the  Secretary  was  contacted, 
Mr.  Phil  Campbell  was  contacted.  Those  two  I  know.  I  am  sure  others 
in  the  Department  of  Agriculture  were  contacted. 

Dr.  George  Mehren  is  an  economist  by  profession.  He  has  his  doc- 
torate in  agricultural  economics.  And  having  been  a  former  Under 
Secretary  or  Assistant  Secretary  of  Agriculture,  he  was  certainly  in- 
volved in  this  particular  phase  of  it,  in  contacting  that  end. 

At  the  same  time,  people  in  the  White  House — for  the  most  part, 
Mr.  Harrison  was  meeting  them.  I  heard  the  name  of  Chotiner ;  I  heard 
the  name  of  Colson ;  and  various  dates  were  being  set  up  by  Mr.  Harri- 
son for  Mr.  Nelson  and  Mr.  Parr  and  Dr.  Mehren  to  contact,  possibly, 
some  of  the  general  managers  or  the  leadership  from  some  of  the  co- 
operatives that  could  have  been  here  during  these  meetings.  But  I  am 
only  talking  about  AMPI  people. 

And,  at  the  time,  we  were — daily,  we  would  meet  several  times  a  day 
to  be  aware  of  who  had  contacted  who  and  where  we  might  be  in  this. 

There  did  come  a  time  in  March  of  1971 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 

Sir.  Weitz.  On  the  record. 

Mr.  Lilly.  During  the — a  concerted  effort  was  being  made  to  influ- 
ence legislators,  administrative  officials.  Sometime  during  the  week  of 
the  15th  of  March  it  looked  as  if,  from  the  administrative  side  of  it,  it 
was  rather  hopeless.  Mr.  Jacobsen  had  been  in  Washington  quite  fre- 
quently, most  of  the  time  with  us,  even  though  he  was  not  the  lead  in- 
dividual in  making  the  contacts.  But  he  did  set  up  an  appointment  with 
John  Connally,  who  was  then  Secretary  of  the  Treasury,  to  talk  with 
him  about  what  assistance  he  might  be  able  to  lend  to  us  in  influencing 
the  administration  to  make  an  administrative  decision  to  increase  the 
price  support. 

Mr.  Nelson.  Dr.  Mehren,  M-e-h-r-e-n,  Jake  Jacobsen  met  with  the 
Secretary,  and  did  discuss  the  need  for  a  price  support,  the  justification, 
as  far  as  the  economics  of  it  were  concerned,  projected  it  into  the  future, 
and  why  we  would  have  to  have  an  increased  price  support..  And  the 
Secretary  indicated  to  them  shortly  thereafter — an  hour,  an  hour  and 
a  half.  2  hours  after  their  meeting,  I  met  with  Mr.  Nelson,  and  with 
Dave  Parr,  and  with  Jake  Jacobsen,  and  with  Marion  Harrison. 

Mr.  Weitz.  But  not  with  Dr.  Mehren  ? 

Mr.  Lilly.  Not  with  Dr.  Mehren — in  the  Madison  Hotel,  where  we 
were  staying  at  the  time,  and  he  indicated  that  Mr.  Connally  was  go- 
ing to  do  what  he  could  in  the  way  o  P  trying  to  convince  the  administra- 


I 


5976 

tion  that  we.  lind  a  problem,  and  it  would  certainly  be  justified  to  jrrant 
an  increase  in  price  supports. 

Mr.  Weitz.  Now,  w^hat — can  you  pinpoint  what  day,  for  example,  the 
meetinfj  with  Connally  would  have  taken  place  ? 

Mr.  Lilly.  No.  It  was  the  week — I  am  lookin<r  at  the  1971  calendar, 
and  it  would  be  the  week  of  the  15th  of  Alarch.  That  is  as  near  as  I  can 
pinpoint  it.  I  would  say  it  would  be  possibly  the  17th  or  18th  of  March. 

Mr.  AVeitz.  vVnd  you  say  that  you  met  with  Nelson,  Jacobsen,  Parr, 
and  Harrison  on  the  same  day,  shortly  after  the  meeting  with  Con- 
nally? 

Mr.  Lilly.  That  is  true.  One  or  two  other  people  may  have  been 
present,  but  I  can  remember  those  people  being  present. 

Mr.  Weitz.  At  that  meeting  with  you,  did  they  discuss  at  the  same 
time,  or — did  they  discuss  political  contributions  in  the  context  of  the 
milk  price  support  ? 

Mr.  Lilly.  Yes,  they  were  talking  about  the  reaction  of  Mr.  Connally 
as  to  what  he  might  do,  and  how  many  people  we  had  had  cosign  the 
bill  and  introduce  it  from  the  Hill,  as  far  as  legislators  were  con- 
cerned. And  then  the  conversation  drifted  into  the  amount  of  money 
that  was  committed  for  getting  an  increased  price  support.  Mr.  Parr 
was  committed  for  $1  million  to  get  an  increased  price  support.  Mr. 
Nelson  was  of  the  opinion  that  it  was  in  the  neighborhood  of  $.">00,000. 
IMr.  Harrison  entered  into  this  conversation;  I  do  not  remember  what 
figure  he  might  have  had  in  mind. 

So,  the  figure  of  commitment — we  had  a  commitment,  apparently, 
according  to  the  discussion,  somewhere  between  $i/^  million  and  $1 
million. 

Mr.  Weitz.  This  is  a  commitment  that  already  existed  at  this  time, 
as  vou  understood  it  ? 

Mr.  Lilly.  As  T  understood  it. 

Mr.  Weitz.  Do  you  understand  who  had  made  the  commitment,  or  to 
whom  it  had  been  made  ? 

Mr.  Lilly.  I  assumed  that  Mr.  Nelson.  Mr.  Parr,  and  Mr.  Plarrison 
had  made  the  commitment.  They  were  aware  of  it,  and  certainly,  all 
indications  were  that  Mr.  Jacobsen  was  aware  that  they  had  made  a 
commitment;  but  Mr.  Jacobsen  entered  into  the  conversation  at  that 
time,  and  said  if  Mr.  Connally  was  going  to  be  of  any  help,  then  cer- 
tainly we  were  going  to  have  to  have  some  new  money  come  in  as  a 
commitment.  And  there  was  not  too  much  argument  against  commit- 
ting new  monevs,  there  within  that  room,  so  a  figure  of — someone 
asked  how  much  would  have  to  be  committed,  how  much  more,  how 
much  additional  moneys  over  and  above  somewhere  between  ^^nOO.OOO 
and  $1  million,  the  difference  of  opinion,  and  the  figure  of  $250,000 
wa'^.  iniected  into  it  at  that  point. 

And  Mr.  Jacobsen  airreed  that  that  would  be  a  reasonable  amount. 
I  mean  new  money,  monev  that  had  not  been  indicated  before. 

Mr.  Weitz.  Have  you  learned  whether,  in  fact.  Nelson,  Jacobsen, 
and  Mehren  were  together  for  the  entire  time  with  Connally,  or 
wliether,  in  fact,  for  a  portion  of  that  meeting  or  right  after  that 
meetinp-,  one  of  them  met  individually  for  a  brief  time  with  Connally? 

Mr.  LiLLv.  Oniv  this  week.  I  was  told  by  Dr.  Mehren — I  was  in  his 
office,  he  ealled  me  into  his  office  in  San  Antonio,  and — I  really  do  not 
know  what  brought  the  discussion  up,  I  was  careful — but  he  brought 


5977 

up  the  meeting  that  they  had  had  with  Mr.  Connally.  I  will  digress 
backwards  for  a  moment,  and  say  that  he,  Monday  and  Tuesday  of 
last  week,  had  attended  a  meeting  in  St.  Louis  with  the  presidents  of 
food  chains,  and  apparently,  people  in  the  food  industry — I  do  not 
know  if  it  was  an  annual  meeting,  or  what  it  was — but  he  had  been 
with  these  people,  and  they  had  heard  some  various  rumors  about 
John  Connally  thrown  about  at  this  particular  meeting,  and  asked  him 
if  he  knew  them  to  be  true,  and  he  said  he  did  not  know  anything  to  be 
time. 

And  then  be  recalled  when  Harold  Nelson  and  he  and  Jake  Jacobsen 
met  with  Connally,  and  truthfully,  until  that  time,  I  really  thought  it 
was  Dave  Parr  and  Harold  Nelson  who  had  met  with  John  Connally, 
along  with  Jake  Jacobsen.  But  he  gave  him  the  information  from  an 
economic  standpoint,  Dr.  Mehren  did.  Mr.  Nelson  added  to  it.  It  was 
this  type  of  conversation ;  a  sincere,  solid  effort  to  justify. 

How  much  time  was  spent,  I  do  not  know,  but  then  they  left,  and 
as  they  departed  the  office,  Mr.  Nelson  and  Dr.  Mehren  and  Mr.  Jacob- 
sen,  the  Secretary  called  Jake  back  into  the  office  and  said  "Let  me 
talk  with  you  privately  for  a  moment."  And  they  had  a  conversation; 
I  do  not  know  what  it  was  related  to.  Dr.  Mehren  told  me  that  this 
week,  or  last  week,  I  am  sorry,  that  this  actually  transpired, 

Mr.  Weitz.  Did  he  tell  you  whether  or  not  he  asked,  or  found  out, 
:vhat  the  Secretary  and  Jacobsen  discussed  in  that  brief  meeting? 

Mr.  Lilly.  He  did  not.  I  did  not  ask  him,  and  he  did  not  tell  me,  and 
I  am  sure  that  he  does  not  know.  I  am  sure  that  Mr.  Jacobsen  did  not 
tell  him. 

Mr.  Weitz.  How  long  was  that  brief  meeting  or  conversation? 

Mr.  Lilly.  He  indicated  just  a  short  time. 

Mr.  Weitz.  A  few  minutes  ? 

Mr.  Lilly.  Just  a  few  minutes. 

Mr.  Weitz.  And  at  the  subsequent  meeting  with  you,  several  hours 
later,  it  was — the  topic  was  raised  that  in  order  to  get  Connally  to 
intercede,  a  commitment  of  new  money  should  be  made? 

Mr.  Lilly.  That  is  right. 

Mr.  Weitz.  Do  you  remember  who  made  that  suggestion  ? 

Mr.  Lilly.  I  know  that  Jake  Jacobsen  strongly  indicated  it.  In  fact, 
he  said,  this  has  to  be  done. 

Mr.  Weitz.  Did  he  initiate  this,  to  the  best  of  your  recollection  ? 

Mr.  Lilly.  I  really  cannot  say  if  he  did  or  not.  I  know  he  was  very 
strong  in  his  statement  that  it  had  to  be  new  money,  other  than  what 
had  been  committed,  and  there  was  really  no  argument  with  this  among 
Mr.  Nelson  and  Mr.  Parr.  I  do  not  know,  though,  if  he  initiated  it  or 
not,  but  it  is  quite  possible  that  he  did. 

Mr.  Weffz.  Now,  after  this  meeting  between  you,  Nelson,  Jacobsen, 
Parr,  and  Harrison,  was  there  a  subsequent  meeting,  to  your  knowl- 
edge, with  some  representatives  of  AMPI  and  the  Secretary  before  the 
new  price  support  decision  ? 

Mr.  Lilly.  Yes.  As  a  matter  of  fact,  according  to  my  diary,  and  ac- 
cording to  the  day  I  left  Washington,  D.C.,  on  that  weekend  of 
March  19,  we  were  in  the  company  jet.  private  plane,  here  at  Page 
Airways  at  National  Airport.  I  know  that  Mr.  Nelson  and  Mr.  Parr, 
Mr.  Keiffer  Howard,  Mr,  Tom_  Townsend,  all  employees  of  AMPI,  and 
possibly  others,  those  are  the  ones  that  I  can  recall  were  present. 


5978 

We  were  waiting  for  the  plane  to  be  brought  around,  so  that  we 
could — this  was  after  dark,  and  the  Secretary  walked  into  Page  Air- 
ways, Secretary  Connally,  and  he  acknowledged  our  presence  by 
waving  his  hand.  And  then  he  called  me  aside  and  talked  with  me  for 
just  a  short  time,  and  told  me  that  he  had  made  contact  on  our  problem, 
and  that  it  looked  good.  He  thought  it  was  going  to  be  all  right,  or  he 
said  something  to  the  effect,  as  I  remember  it,  that  "It  is  in  the  bag" 
for  us. 

Mr.  Weitz.  Did  he  indicate  who  he  had  made  contact  with? 

Mr.  Lilly,  No.  I  certainly  would  just  have  to  assume,  what  he  said 
and  the  way  he  said  it,  that  he  had  personally  talked  with  the 
President. 

Mr.  Weitz.  He  did  not  say  so  explicitly,  though  ? 

Mr,  Lilly.  No,  he  did  not  sa}^  that,  but  certainly,  he  did  not  indicate 
that  it  would  have  been  the  Secretary  of  Agriculture  that  he  had  talked 
with,  and  T  would  not  think  that  he  would. 

Mr.  Weitz.  Between  the  meeting  you  had  with  Nelson  and  the  others 
after  the  first  Connally  meeting  and  the  time  that  you  saw  the  Secre- 
tary in  the  airport,  were  you  aware  whether  any  of  them  had  recon- 
tacted  the  Secretary,  or  had  met  with  him  ? 

Mr.  Lilly.  No,  I  am  not  aware  of  any  further  meeting  or  contact 
with  him. 

Mr.  Weitz.  Did  he  tell  you  to  tell  the  others  at  that  time? 

Mr.  Lilly.  Yes,  he  did.  Ho  said.  "You  can  pass  the  word  along  to 
your  other  coworkei'S,  or  the  other  people  with  you,"  or  whatever  he 
might  have  said.  And  when  we  were  aboard  the  plane,  and  headed 
back,  T  did  tell  them,  and  they  Avere  quite  elated  about  the  situation, 
being  Friday.  The  first  part  of  the  week  we  had  felt  rather  downcast 
and  defeated  on  this  thing,  and  tlien,  it  looked  like  we  were  going  to  be 
successful  in  what  we  were  trying  to  do. 

Mr.  Weitz.  Who  was  on  the  flight  back  with  you  ?  Do  you  recall  ? 

Mr.  Lilly.  Well,  T  named  Harold  Nelsori,  Dave  Parr,  Tom  Town- 
send,  Keiffer  Howard,  It  seems  the  plane  holds  10  or  12  people,  and  it 
was  near  full,  but  this  is  all  I  can  recall  at  the  time. 

Mr.  Weitz.  Why  did  he  pull  you  over?  He  had  met  that  week  with 
at  least  Nelson  of  this  group. 

Plow  long  have  you  known  the  Secretary  ? 

Mr.  Lilly.  Well,  of  course,  I  had  known  Connally  prior  to  the  time 
that  he  was  Governor  of  Texas.  He  was  G'overnor  for  fi  years,  and  he 
has  had  what,'4  years  since  that  time,  and  the  present  Governor  that  we 
liave  now.  I  have,  known  him  prior  to  that.  So  I  ha^-e  known  him  prob- 
ably 12  or  1.5  years.  I  knew  him  much  closer  than  any  of  the  other 
people,  Tom  Townsend  was  originally  from  Kansas,  Dave  Parr  from 
Arkansas,  Harold  Nelson  from  Texas,  but  he  did  not  work  in  State 
politics  like  I  did.  Rut  I  lived  in  Austin.  I  knew  Connally  from  a 
number  of  years  back,  so  I  think  it  would  be  logical  tliat  he  would  talk 
to  mo,  because  I  know  him  better  than  anyone  present. 

Mr.  Weitz.  Had  vou  ever  worked  on  a  campaign  of  his.  or  any- 
thing? 

Mr.  Lilly.  No;  I  had  never  worked  on  a  campaign  of  his.  I  had 
lobbied  for  the  Texas  Farm  Rureau  for  a  luunber  of  veai-s  while  Mr. 
Connally  was.  Governor.  He  vetoed  a  number  of  bills.  T  was  not 
successful  in  overriding  any.  We  did  ])ass  some,  after  he  vetoed  them. 


5979 

the  next  year.  It  was  strictly  an  above-board  type  thing.  He  was  a 
hard  scrapper,  but  it  was  a  working  relationship. 

Mr.  Weitz.  How  often  do  you  think  you  had  contact  with  him,  for 
example,  during  his  years  as  Governor  ? 

Mr.  Lilly.  Oh,  during  his  years  as  Governor,  during  the  legislative 
session,  three  or  four  times  a  week. 

Mr.  Weitz.  Personally,  you  personally  met  with  him  ? 

Mr.  Lilly.  Yes ;  I  personally 

Mr.  Weitz.  How  long  were  these  ? 

Mr.  Lilly.  This  may  be  a  3-minute  visit,  a  5-minute  visit. 

Mr.  Weitz.  Were  you  alone,  usually,  at  most  of  these  meetings  ? 

Mr.  Lilly.  At  some  times,  I  would  be  alone,  at  other  times  I  would 
be  with  a  legislator,  a  senator,  a  speaker  of  the  house. 

Mr.  Weitz.  But  there  would  not  be  a  large  group  of  people  ? 

Mr.  Lilly.  Oh,  no. 

Mr.  Weitz.  Did  he  know  you  by  first  name  ? 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  Did  you  call  him  by  his  first  name  ? 

Mr.  Lilly.  No. 

Mr.  Weitz.  How  did  you  address  him  ? 

Mr.  Lilly.  I  addressed  him  as  Governor  at  that  time  ? 

Mr.  Weitz.  And  how  did  he  address  you  ? 

Mr.  Lilly.  He  addressed  me  as  Bob,  and  quite  often  as  Mr,  Lilly. 

Mr.  Weitz.  When  he  left  the  governorship,  when  was  that? 

Mr.  Lilly.  About  6  or  6  years  ago. 

Mr.  Nicholas.  He  left  in  1968.  In  1968  he  appointed  Roy  Secretary 
of  State,  so  in  1969  was  the  last  year. 

Mr.  Weitz.  1969  ? 

Mr.  Nicholas.  Yes. 

Mr.  Weitz.  So  during  the  period  until  1969,  you  had  very  frequent 
contact  with  him  ? 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  Since  1969,  have  you  had  much  contact  with  him  ? 

Mr.  Lilly.  Infrequent.  I  have  run  into  him  at  an  airport,  maybe 
at  a  political  fundraising  party  or  something  to  that  effect,  but 
no  close  contact  with  him. 

Mr.  Sanders.  Was  Jacobsen  in  this  group  flying  back  ? 

Mr.  Lilly.  No  ;  he  was  not. 

Mr.  Nicholas.  I  was  going  to  ask  him  a  question  on  that  point. 
What  was  the  physical  position  of  the  parties  that  were  boarding  the 
AMPI  private  jet  at  the  time  Connally  saw  you  and  you  saw  him? 

In  other  words,  was  he  passing  one  way,  and  you  passing  another, 
that  would  have  called  you  to  his  attention  ? 

Mr.  Lilly.  Well,  as  we  were  going  to  the  airport,  we  were  possibly 
in  two  taxis  if  there  were  that  many  of  us,  and  on  the  way  to  the  air- 
port, the  Secretary — we  passed  him,  and  he  passed  us  in  the  traffic.  It 
was  near  dark,  I  mean,  in  fact,  we  saw  him  on  the  way  to  the  airport 
to  National  Airport,  and  someone,  I  think  it  was  Dave  Parr,  men- 
tioned that  there  is  the  Secretary.  And,  as  a  matter  of  fact,  I  believe 
he  waved  to  him  on  the  way  to  the  airport,  and  I  lam  not  sure  if  Sec- 
retary Connally  waved  back  or  not.  And  then,  of  course,  Page  Air- 
ways, if  you  are  familiar  with  the  National  Airport,  it  is  separated 
somewhat  from  the  commercial  hangar,  and  has  its  own  lobby.  And  it 


5980 

is  not  a  large  lobby,  and  it  is  not — here  we  were,  a  group,  it  would  be 
quite  easy.  It  was  not  crowded  like  in  the  commercial  airports,  so  it 
would  be  pretty  hard  to  walk  into  the  Page  Airways  terminal  and 
not  see  us.  I  mean  into  their  lobby 

Mr.  Nicholas.  Who  was  Connally  with,  do  you  know  ? 

Mr.  Lilly.  He  was  alone. 

Mr.  Nicholas,  He  was  alone  ? 

Mv.  Lilly.  He  was  alone. 

Mr.  NiCFiOLAS.  Of  the  group  that  went  with  you,  would  you  say 
you  knew  him  the  best  ? 

Mr.  Lilly.  I  certainly  knew  him  the  best:  probably  the  only  one 
that  knew  him,  had  really  worked  with  him  in  the  past. 

Mr.  Nicholas.  Because  Jake  was  not  there  ? 

Mr.  Lilly.  Jake  was  not  there.  That  is  right. 

Mr.  Nicholas.  And  Joe  Long  was  not  there  ? 

Mr.  Lilly.  No  ;  Joe  Long  was  not  there. 

Mr.  Nicholas.  And  how  about  Harold  Nelson  ? 

Mr.  Lilly.  Harold  Nelson  was  there,  but  Harold  Nelson  had  never 
really  moved  in  this  particular  area,  in  working  or  legislation  on  a 
State  level.  He  had  not  been  too  active  politically  on  State  politics, 
and  just  outside  of  knowing  him  and  recognizing  him,  he  really  did 
not  know  him. 

Mr.  Nicholas.  Were  you  at  all  surprised  that  he  singled  you  out? 

Mr.  Lilly.  No;  not  particularly,  because  while  he  was  Governor, 
we  have  had  many  fights  and  many  blowups,  and  I  have  raised  the 
devil  with  him  because  he  would  not  take  certain  action  and  sign  a 
bill  or  veto  it,  and  consequently  he  would  do  the  same  to  me,  and  it 
was  strictly  on  a  professional -type  basis,  nothing  personal  in  it.  So 
this  goes  back  to  a  long  standing  on  that,  so  I  think  he  would  have 
known  me  and  talked  to  me.  where  he  would  not  have  talked  to  them 
on  a  chance  meeting  like  we  did  have. 

Mv.  Nicholas.  Well,  what  he  told  you — you  know,  what  he  told  you 
at  the  time 

l\fr.  Lilly.  Yes. 

Mr.  NiCH0i>AS.  In  your  opinion,  would  he  be  more  likely  to  tell 
you  something  like  that  than  he  would  anybody  else  ? 

Mr.  Ln.LY.  I  think  so. 

Mr.  Nicholas.  Except  for  Jake  or  Joe  Long, 

Mr.  Tjlly.  Well.  I  think  he  would  have  told  Jake,  but  T  doubt  if 
he  would  have  told  Joe  Long,  But  T  think  he  would  have  told  Jake, 
and  if  the  three  would  have  been  there.  I  think  lie  would  have  told 
the  second,  because  Joe  Long  is  not  that  close  to  him. 

Mr.  Nicholas.  For  instance,  when  you  knew — you  were  the  close 
fi'iend  of  Price  Daniel  when  he  was  Governor? 

Mr.  Lilly.  Very  close. 

Mr.  Nicholas.  Did  you  know  Connallv  then? 

Mr.  Lilly.  Yes;  I  knew  Connally  at  that  time. 

Mr.  Sanders.  Just  one  question.  Did  you  make  any  notes  after  your 
conversation  with  Connally?  Did  you  make  any  notes  of  what  he  said? 

Mr.  Lilly.  No;  T  did  not  make  any  notes,  because  sliortly  thereafter, 
we  were  on  the  plane,  and  T  told  the  other  people,  in  essence,  what  I 
hope  that  I  have  related  here.  And  T  told  them,  and  we  were  quite 
jubilant  on  our  way  back.  T  did  not  make  any  notes  of  it;  the  only — 


5981 

because  we  had  been  at  this  thing  for  several  weeks,  contacting  legis- 
lators, getting  people  to  sign  or  cosign  bills,  introduce  bills,  and  then, 
the  next  week,  we  still  had  not  gained  anything.  April  1  was  just 
around  the  corner.  It  looked  like  we  had  to  go  the  legislative  route 
to  get  acconiplislied  what  we  wanted  to  accomplish,  and  suddenly  we 
did  not  have  to.  In  i'act,  I  was  not  in  Washington,  D.C,  the  next 
week.  We  quit;  I  did  not  even  go  back  and  start  working  the  Hill 
anymore. 

Mr.  Weitz.  At  his  instruction,  or  at  a  mutual  understanding? 

Mr.  Lilly.  Well,  we  were  convinced  tliat  we  did  not  have  to  go 
back. 

Mr.  Weitz.  I^et  me  ask  you  something.  What  was  the  jetliner  ?  Was 
it  the  Saberliner? 

Mr.  Lilly.  Saberliner. 

Mr.  Weitz.  I  have  a  jet  log  here  for  the  month  of  March  197L 
And  can  you  tell  me^ — you  say  you  think  it  was  the  19th,  which  is  what 
day  of  the  week  ? 

Mr.  Lilly.  That  is  on  Friday. 

Mr.  Weitz.  To  the  best  of  your  recollection,  would  it  have  been 
Friday  or  Saturday  that  you  flew  back? 

Mr.  Lilly.  Well,  according  to — it  would  have  been  Friday.  It  might 
have  been  Saturday  when  we  arrived  at  San  Antonio,  because  we 
left — I  know  it  was  dark  here.  Of  coui-se,  that  time  of  year,  the  days 
are  shorter,  but  on  Saturday,  I  show  myself  going  back  to  San 
Antonio,  and  being  in  San  Antonio. 

Mr.  Weitz.  From  where  ? 

Mr.  Lilly.  From  Washington,  D.C. 

Mr.  Weitz.  On  Saturday? 

Mr.  Lilly.  No  ;  on  Friday,  because  Saturday  I  was  in  San  Antonio. 
In  my  calendar  that  I  have  made  available  to  you,  in  my  daily  diary, 
where  I  keep  tab 

Mr.  Weitz.  Have  you  ever  looked  at  a  jet  log  report — flight  report? 

Mr.  Lilly.  No. 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Weitz.  On  the  record. 

I  have  the  flight  report  for  what  I  believe  to  be  March  19  and 
March  20  of  1971.  March  19  shows  the  Saberliner  going  from  San 
Antonio  to  Dallas,  Dallas  to  San  Antonio,  San  Antonio  to  Washing- 
ton. And  on  the  20th.  it  shows  Washington  to  OTG;  I  think  that  is  in 
Minnesota  somewhere.  OTG  to  Austin,  Aiistin  to  San  Antonio,  which 
would  have  been  Saturday.  I  am  not  sure  1  am  reading  this  correctly. 

Mr.  Lilly.  It  does  not  show  passengers  ? 

Mr.  Weitz.  No;  unfortunately  the  list  does  not  show  passengers. 

Mr.  Lilly.  Does  it  show  the  pilots  ? 

Mr.  Weitz.  Yes. 

Mr.  Lilly.  Well,  on  the  19th,  was  Joe  Bell  one  of  the  pilots  ? 

Mr,  Weitz.  No. 

Mr.  Lilly.  It  shows  first  pilot  Blanten  and  second  pilot  Goggans, 
or  Goggans,  G-o-g-g-a-n-s. 

Well,  on  mj'^  calendar  of  1971 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 


30-337   O  -  74  -  9 


5982 

Mr.  Weitz.  Where  did  the  flight  go  from  Washington  ? 

Mr.  Lilly.  It  originated  at  Page  Airways  at  NationB.1  Airport,  and 
the  first  stop  was  in  Little  Rock,  Ark.,  to  let  Mr.  Parr  and  some  of 
the  other  passengers  off.  Tom  Townsend  and  Keiffer  Howard,  they 
both  lived  in  Little  Rock,  Ark.,  to  let  them  both  off.  And  the  remainder 
of  us  continued  on  to  San  Antonio. 

Mr.  Weitz.  Did  you  stop  in  Austin  ? 

Mr.  Lilly.  No,  we  did  not  stop  in  Austin,  We  had  gone  from  Little 
Rock  to  San  Antonio. 

Mr.  Weitz.  When  did  you  first  learn  of  the  actual — ^the  second  price- 
support  decision  ? 

Mr.  Lilly.  Officially,  as  far  as  I  was  concerned,  I  learned  of  it  the 
date  that  it  was  announced.  The  Secretary  of  Agriculture  announced 
it  March  the 

Mr.  Weitz.  25th? 

Mr.  Lilly.  25th. 

Mr.  Weitz.  Between  the  time  of  your  chance  meeting  with  the 
Secretary  in  the  airport  and  the  time  when  you  learned  of  the  public 
decision,  second  decision  by  the  Secretary  of  Agriculture,  do  you  know 
of  any  further  contacts  between  representatives  of  AMPI  and 
Connally  ? 

Mr.  Lilly,  Possibly,  there  could  have  been.  But  I  was  not  told  of 
any,  and  I  am  not  aware  of  any. 

Mr.  Weitz.  You  were  not  told  ? 

Mr.  Lilly.  [Nods  in  the  negative.] 

Mr.  Weitz.  Do  you  know  how  and  when  the  decision  was  made  to  go 
ahead  and  actually  make  these  contributions  of  the  new  money  of  one- 
quarter  of  a  million  dollars  that  was  discussed  at  that  meeting  plus  the 
prior  commitment  ? 

Mr.  Lilly.  Would  you  restate  that  ? 

Mr.  Weitz.  After  the  milk — well,  during  the  following  week,  the 
week  of  March  21  or  22,  were  you  aware  of  any  discussions  which 
related  to  the  ways  in  which  contributions  would  in  fact  be  made? 

Mr.  Lilly.  No.  The  next  week,  though,  contributions  were  made  by 
TAPE— $10,000.  The  week  of  March  21  or  22,  the  Republicans  had  at 
that  particular  week  the  Senate  and  House  fundraising  affair,  which 
is  annually,  and  we  normally  contribute  to  the  Republicans  and  to  the 
Democrats.  The  only  difference  in  1971  and  other  years,  normally  that 
check  is  made  out  for  $10,000,  contributed  to  the  amount  of  $10,000, 
which  usually  buys  a  table  for  10,  or  whatever  it  might  be.  But  in  this 
particular  year  of  1971,  a  decision — I  might  say  this,  the  decision  to 
contribute  had  already  been  made.  We  were  going  to  contribute 
$10,000.  This  had  no  bearing  on  it  one  way  or  the  other. 

But  Marion  Harrison  instructed  me,  and  I  do  not  have  the  names  of, 
but  he  instructed  me  to  make  out  four  TAPE  checks  to  four  different 
committees  totalling  $10,000.  Two  of  them  were  for  $3,000,  and  two  of 
them  were  for  $2,000  each,  making  a  total  of  $10,000.  And  this  was  a 
little  unusual  and  different,  but  Mr.  Nelson  said  it  was  all  right  to  do 
this.  So  it  made  no  difference  to  me.  It  was  for  the  same  purpose.  We 
did  have  people  in  attendance  at  the  meeting  which  was  held  that 
particular  week  that  the  price-support  announcement  was  made,  and 
I  am  not  sure  of  the  date.  And  if  I  attended,  I  do  not  remember,  but  I 


5983 

possibly  could  have  been  one  of  the  attendees  of  the  Eepublican  fund- 
raising  affair. 

Mr;  Weitz.  But  neither  Mr.  Nelson  nor  Mr.  Harrison  indicated  why 
the  contribution  should  be  made  in  that  way  ? 

Mr.  Lilly.  No.  And  of  course,  following  later  there  were  other  con- 
tributions at  other  times  in  the  year. 

MrJVEiTZ.  Were  you  privy,  for  example,  to  the  discussions,  any  dis- 
cussions, relating  to  contributions  by  the  other  two  co-ops  during  this 
period  ? 

Mr.  Lilly.  No. 

Mr.  Weitz.  Were  you  aware,  for  example,  of  the  $50,000  loan  from 
TAPE  to  ADEPT  shortly  after  that  week  ? 

Mr.  Lilly.  I  was  aware  of  that  because  shortly  after — Mr.  Isham 
checked  with  an  attorney  and  I  cannot  recall  the  attorney's  name  that 
he  might  have  checked  with.  It  could  well  have  been  DeVier  Pierson, 
or  it  could  have  been  Mr.  Jacobsen,  or  it  could  have  been  both  of  them. 

But  he  contacted  them,  if  we  could  make  a  loan  to  ADEPT,  which 
was  a  newly  organized  political  arm  of  Mid- America  Dairymen.  And 
the  decision  was  yes,  we  could.  The  loan  was  made. 

Outside  of  Mr.  Isham  telling  me  that  we  were  making  a  loan,  I  do 
not  know  whether  it  carried  any  rate  of  interest  or  not,  or  whether 
it  was  a  noninterest  loan. 

It  was  later  paid  back.  I  do  not  know  how  much  later,  but  other 
than  just  in  passing,  Mr.  Isham  told  me  about  it,  and  they  were  newly 
organized,  they  had  very  little  money  to  spend  at  that  time.  And  this 
is  just  my  recollection,  my  understanding  of  it. 

Mr.  Weitz.  I  have  here  copies  of  check  stubs  of  12  checks,  dat-ed 
April  26,  1971,  each  in  the  amount  of  $2,500.  The  stubs  indicate  that 
they  are  for,  to  various  committees,  in  most  cases,  and  "void"  is  writ- 
ten across  each  stub.  And  these  were  provided  to  us  from  the  TAPE 
records  by  TAPE. 

And  I  wonder  if  you  would  look  at  these  and  just  tell  me  if  you  know 
anything  about  those,  the  transactions  or  the  intended  transactions 
indicated  by  those  check  stubs  ? 

Mr.  Lilly.  These  particular  stubs — I  do  not  know  how  many  we 
have  here.  I  have  some  correspondence,  and  I  have  copies  of  it,  that 
relate  back.  And  there  were  several  efforts  on  the  part  of  Mr.  Harri- 
son. He  supplied  the  names,  or  at  least  his  signature  was  over  the  letter 
where  the  names  came  in  to  TAPE.  There  is  a  series  of  names,  letters, 
those  names  canceled  out,  other  names  substituted  for,  and  eventually 
they  came  up  with  some  names.  And  I  think  these  were  some  of  the 
earlier  names,  and  for  some  reason,  and  I  am  not  aware — I  am  unin- 
formed as  to  why  they  were  voided  and  not  issued  at  that  time. 

A  series  of  checks  were  issued  in  June  after  this — I  have  fors:otten. 
I  know  that  they  were  $2,500  each,  I  did  deliver  the  checks  to  Marion 
Harrison's  office,  and  did  take  the  money  that  we  got. 

Mr.  Weitz.  Were  both  these  intended  contributions  and  the  contribu- 
tions that  were  in  fact  made  that  you  delivered  to  Marion  Harrison 
later,  do  you  know  whether  these  were  part  of  the  commitment  that  was 
discussed  in  March  of  1971  ? 

Mr.  Lilly.  Well,  since  there  was  a  series  of  checks  that  came  from — 
that  were  contributed — I  know  it  totalled  $187,000  eventually. 

[Discussion  off  the  record.] 


5984 

Mr.  Weitz.  Back  on  the  record. 

I  want  to  identify  as  exhibit  No.  27  the  check  stubs  that  I  have  shown 
to  Mr.  Lilly  and  which  he  has  identified. 

[Whereupon,  the  documents  referred  to  were  marked  Lilly  exhibit 
No.  27  for  identification.*] 

Mr.  Weitz.  During  the  summer  of  1971,  other  than  the  delivery  of 
some  checks  to  Mr.  Harrison,  did  you  have  contact  with  the  process  by 
which  contributions  were  made  by  TAPE  to  the  committees  estab- 
lished by  the  predecessor  of  the  Committee  To  Re-Elect  the 
President  ? 

Mr.  Lilly.  No  ;  I  was  kept  aware  of  it  by  Mr.  Isham. 

In  September  of  1971,  another  series  of  checks  were — I  know  the 
first  series  of  checks  I  did  take  to  Mr.  Harrison  personally.  The  second 
series,  I  do  not  know  if  I  delivered  or  if  they  were  mailed  or  if  someone 
else  delivered  them.  But  I  think  the  total  series  of  checks  totalled  75, 
covering  the  area  that  appeared  in  June.  It  appeared  in  September, 
when  the  contributions  were  made,  and  they  were  all  written  at  the 
same  time  by  names  of  the  committees  and  addresses  of  people  that 
were  supplied  from  Mr.  Harrison's  office. 

And  of  course  we  had  some  problem  from  the  fact  that  the  com- 
mittees that  the  checks  were  delivered  to  were  fictitious  addresses. 
Some  of  the  people  happened  to  be  Democrats,  and  they  did  contact, 
and  wrote  to  the  Clerk  of  the  House.  We  had  a  few  problems  along 
that  line,  of  which  Mr.  Isham  made  me  aware.  He  was  most  unhappy 
when  he  found  that  they  could  not  give  us  good  names  and  addresses. 

He  did  get,  and  I  probably  had  a  conversation  or  two  with  Mr.  Har- 
rison about  some  statement,  a  signed  statement  that  these  funds  that 
were  contributed  would  be  used  to  help  reelect  the  President.  And  we  do 
have  in  the  TAPE  files  a  statement  to  this  effect,  that  they  would  be 
used  for  this  purpose. 

Mr.  Weitz.  Was  that  not  an  opinion  letter  obtained  at  the  insistence 
of  INIr.  Isham  in  order  to  insure  the  legality  of  the  contributions? 

Mr.  Lilly.  That  is  possibly  what  it  is,  yes. 

Mr.  Weitz.  I  would  like  to  move  to  1972,  to  a  series  of  meetings 

Mr.  Sanders.  Are  you  finished  with  the  price  support? 

Mr,  Weitz.  This  ties  it  with  it. 

If  you  want  to  ask  some  questions 

Off  the  record. 

FDiscussion  off  the  record.] 

Mr.  Sanders.  Back  on  the  record. 

To  your  knowledge,  were  Connally  and  Mills  close  friends? 

Mr.  Lilly.  I  have  no  personal  knowledge  of  that. 

Mr.  Sanders.  What  person  in  the  House  of  Representatives  did 
AMPI  consider  to  be  the  most  significant  individual  to  advance  legis- 
lation in  its  behalf  ? 

Mr.  Lilly.  Well,  certainly  the  Ag  Committee  we  could  not  ignore, 
with  Mr.  Bob  Poage  being  Chairman  of  the  Ag  Committee.  And.  of 
rourse,  Graham  Purcell  and  Tom  Folev.  Ed  Jones,  some  of  the  good 
hardworking  members  that  have  been  on  the  Ag  Committee  for  some 
time.  Of  course.  Mr.  Purcell  is  now  ffone  and  no  longer  a  member.  But 
pex)ple  that — the  entire  Ag  Committee,  we  worked  with.  That  was  our 
first  contact.  We  contacted  the  leadershin  of  the  House  as  far  as  the 
minoritv  was  concerned. 

*See  p.  6050. 


5985 

We  talked  with — I  did  not — ^but  Mr.  Ford  was  contacted,  and  we 
did  work  with  him  in  regard  to  this. 

And  I  might  say  that  we  went  about  it  in  some  organized  manner, 
taking  the  States  in  which  we  had  members,  the  people,  that  those  of 
us  that  might  be  in  contact,  who  could  contact  certain  individuals  and 
be  more  effective  with  them.  Louisiana  we  had — I  remember  Louisiana. 
We,  drawing  the  States  of  I^ouisiana  and  Texas,  we  had  to  call  in 
another  cooperative  from  Louisiana,  have  them  send  some  of  their  own 
producers  up  here  to  contact  people  from  Louisiana,  because  we  did  not 
have  the  inroads  to  them  that  we  did  have  Congressmen  from  Texas — 
have  the  acquaintance  with  them,  and  know  them  as  well  as  we  do  in 
Oklahoma,  Texas,  Kansas,  various  other  States. 

And  then  we  used  other  cooperatives  across  the  country,  on  the  West 
Coast,  from  the  East  Coast  to  the  southern  area  and  mid-State  area  of 
the  United  States.  And  they,  too,  would  take  their  assignments,  and  we 
made  some  efforts  to  coordinate  this  so  that  10  people  would  not  be 
going  to  contact  the  same  Congressman  in  an  effort  to  develop  this. 

And  I  know  you  have  asked  me  who  was  the  most  influential  and 
it 

Mr.  Sanders.  Did  you  consider  Wilbur  Mills  a  significant  person 
to  be  persuaded  ? 

Mr.  Lilly.  Yes,  very  significant.  Yes,  very  significant,  very  im- 
portant. 

Mr.  Sanders.  Why  ? 

Mr.  LiixY.  Possibly  because  of  his  long  tenure  of  service.  Probably 
just  as  much  so  'because  of  his  chairmanship  of  the  Ways  and  Means 
Committee,  which  is  rather  important. 

Mr.  Sanders.  Would  that  committee  have  been  handling  any  legis- 
lation that  you  were  interested  in  ? 

Mr.  Lilly.  No ;  but  Mr,  Parr  being  from  Arkansas  and  Mr.  Mills 
being  from.  Arkansas,  they  had  a  rather  close  working  relationship. 

Mr,  Sanders.  The  legislation  which  you  had  desired  would  have 
been  processed  by  the  Agriculture  Committee,  rather  than  the  Ways 
and  Means  ? 

Mr.  Lilly.  That  is  right. 

Mr.  Sanders.  Who  in  AMPI  had  overall  responsibility  for  coor- 
dinating the  lobbying  effort  in  the  House  ? 

Mr.  Lilly.  Within  AMPI  1  think  ultimately  it  went  to  Mr.  Nelson. 
I  had  some  input  into  it.  Dave  Parr  had  some  input  into  it.  Probably 
the  three  of  us.  Other  people  certainly  had  some  input.  They  had  some 
ideas  and  they  were  not — I  can  remember  Joe  Johnson,  an  employee 
who  worked  for  us  at  the  time  from  Arkansas.  Pie  certainly  had  some 
ideas.  Tom.  Townsend.  who  I  have  mentioned,  originally  from  Kansas, 
certainly  had  some  input,  into  it  because  he  too  knew  some  people. 

But  as  to  who  should  contact  who,  probably  I  kept  a  closer  record, 
along  with  Lyn  Stahlbaum,  who  was  ari  employee  of  ours  then  and 
still  is,  and  had  been  a  past  Congressman  from  the  State  of  Wisconsin. 
And  he  was  very  effective,  very  well  known,  very  well  respected  on 
the  Hill,  and  is  still  in  Washington  working  for  us. 

Mr.  Sanders.  In  retrospect,  does  it  appear  to  you  that  the  lobby- 
ing efforts  which  AMPI  made  with  Members  of  Congress  had  some 
impact  on  the  ultimate  decision  to  raise  the  price  supports? 

Mr.  Lilly.  This  is  an  opinion  of  mine,  I  think 

Mr,  Sanders.  If  anybody  is  an  expert  on  it,  you  are. 


Mr.  Lilly.  I  think  it  did  have  an  impact.  We  had  some  150  House 
Members  that  had  signed  or  cosigned  a  bill.  Really,  my  projection 
was — I  have  some  figures  somewhere,  somewhere  in  the  neighbor- 
hood of  225  that  we  would  have  on  the  bill.  We  would  have  well  over 
one-half  the  Senate  on  the  bilL  And  it  is  pretty  hard,  I  mean  this  is 
where  we  were  headed. 

And  I  might  say,  had  I  prevailed  in  my  own  argument  we  would 
have  gone  the  legislative  route,  because  we  had  some  very  vicious 
arguments  over  this  particular  issue. 

Mr.  Sanders.  Had  the  House  Agriculture  Committee  started  hear- 
ings on  the  bill  ? 

Mr.  Lilly.  Yes;  they  had  started  hearings  on  the  bill,  and  it  had 
moved  out  rather  rapidly. 

Mr.  Sanders.  Was  it  reported  out  before  the  administration  had 
announced  its  decision  ? 

Mr.  Lilly,  I  will  say  this.  It  was  in  a  position  to  be  moved  out.  I 
do  not  know  whether  it  moved  out  or  not.  I  would  have  to  go  back 
and  check  my  notes.  But  I  know  that  the  subcommittee  had,  the  dairy 
subcommittee  had  met.  I  believe  the  dairy  subcommittee  had  acted 
favorably,  and  I  believe  it  was  pending  a  determination  by  us  as  to 
when  it  should  be  moved  out  of  committee. 

So  I  am  not  sure 

Mr.  Sanders.  Was  the  legislation  still  more  favorable  than  the  de- 
cision that  was  made  by  the  executive  branch  ? 

Mr,  Lilly.  No  ;  there  was  no  difference. 

This  is  philosophizing,  but  to  me  we  had  committed  in  the  neigh- 
borhood of  150  legislators  to  put  their  name  on  the  bill,  and  had  com- 
mitted themselves  to  go  with  us.  I  think  we  could  have  gotten  more. 
I  felt  sure,  had  the  bill  passed  it  would  have  been  vetoed,  I  do  not 
think  we  had  the  votes  to  override  it,  I  think  if  we  came  back  the  next 
year,  we  could  have  passed  almost  anything  we  wanted  to  with  the 
legislators.  I  felt  in  leaving  them  and  going  the  route  we  did,  that 
we  had  some  of  them  that  we  had  committed,  and  we  ran  off  and  left 
them  right  in  the  middle  of  the  stream, 

Mr,  Sanders,  I  am  not  familiar  with  the  legislation. 

Did  it  specify  the  extent  of  the  support,  or  did  it 

Mr,  Lilly,  I  believe  most  of  the  bills  were  80  percent,  if  my  memory 
serves  me  right,  80  percent  for  1  year.  Some  bills  were  introduced  at  85 
percent.  Of  course,  it  could  have  been  between  75  and  90  percent, 
according  to  existing  law.  And  this  would  have  set  it  at  1  year  at  80 
percent  price  support. 

Mr,  Sanders,  At  what  level  did  the  Secretary  of  Agriculture's 
announcement  fix  it  ? 

Mr.  Lilly.  At  about  80  percent. 

Mr,  Sanders,  So  the  legislation  and  the  Secretary's  announcement 
were 

Mr,  Lilly,  Fairly  close  together. 

Mr,  Sanders,  Comparable? 

Mr,  Lilly,  I  would  have  to  review  my  notes  to  be  sure  on  that,  but  I 
feel  sure — I  mean  that  is  close  to  correct. 

Mr,  Sanders.  Did  Chairman  Poage  take  a  public  stand  on  your 

Mr,  Lilly,  He  introduced  the  bill, 

Mr.  Sanders.  He  introduced  the  bill  ? 

Mr.  Lilly.  He  did. 


5987 

Mr.  Sanders.  Did  Chairman  Mills  take  a  public  stand  ? 

Mr.  Lilly.  He  did  not  introduce  the  bill. 

Mr.  Sanders.  Do  you  know  if  he  declared  his  position  on  it  ? 

Mr.  Lilly.  He  declared  his  position.  And  as  a  matter  of  fact  he  sug- 
gested some  of  those  we  might  talk  with  to  endoi-se  the  bill. 

Mr.  Sanders.  He  was  supportive  of  your  legislation? 

Mr.  LiiJLY.  He  certainly  w^1S. 

Mr.  Sanders.  Do  yoa  know  whether  any  commitments  were  made  to 
any  Congressmen  in  connection  with  the  AMPI  desire  to  advance  this 
legislation? 

Mr.  Lilly.  I  am  not  aware  of  any.  I  made  no  commitments  myself. 

Mr.  Sanders.  No  financial  commitments? 

Mr.  Lilly.  I  made  no  financial  commitments,  and  I  am  not  aware  of 
any  commitment  being  made. 

Mr.  Sanders.  Do  you  know  of  any  AMPI  moneys  going  to  any  Con- 
gressmen at  any  time  in  1971  in  relationship  to  the  lobbying  effort  you 
had  made  for  this  legislation  ? 

Mr.  Lilly.  I  think  that  some  honorariums  were  paid  to  some  Con- 
gressmen and  to  some  Senators  that  attended  our  annual  meeting.  I 
know  that  I  introduced  Senator  Stevens  at  our  annual  meeting,  and  he 
spoke  to  a  number  of  dairymen.  This  was  held  in  Chicago.  This  was 
rather  a  large  convention  of  some  40,000  dairy  farmers.  And  we  had  a 
great  many,  as  a  matter  of  fact,  and  I  think  we  had  the  majority  of  the 
House  and  Senate  at  this  meeting.  And  most  of  those  were  given 
honorariums,  and  these  moneys,  if  my  memory  serves,  I  believe  came 
from  AMPI  for  attending  these  meetings.  And  they  did  address  our 
people  and 

Mr.  Sanders.  What  was  the  largest  honorarium  ? 

Mr.  Lilly.  Oh,  around  $1,500  as  I  remember.  Most  of  the  hon- 
orariums— I  have  seen  some  letters,  thank  you  letters  on  them — in 
that  neighborhood.  So  to  this  extent,  I  mean  there  would  have  been 
AMPI  moneys.  But  here  we  had  people  to  attend  the  meeting,  and 
they  had  to  get  out  there  and  they  had  to  get  back.  They  took  their 
time.  And  it  is  not  an  unusual  custom  to  do  this. 

Mr.  Sanders.  Do  you  know  of  any  TAPE  payments  to  Congressmen 
in  connection — resulting  from  your  lobbying  effort  on  the  legislation? 

Mr.  Lilly.  Well,  not  in  my  mind.  We  contributed,  and  I  am  certain 
that  we  contributed  to  a  great  many  of  the  people  who  did  introduce 
our  legislation.  I  think  our  past  track  record  would  have  indicated 
that  we  would  have  contributed  to  the  same  people  had  they  not  have 
introduced  legislation.  They  were  people  that  we  can  work  with  in 
agricultural  States,  had  built  up  some  working  relationship  with, 
and  in  the  instance  of  some  that  may  have  supported  us,  there  is  quite 
a  possibility — and  I  have  not  checked  this  out — that  we  contributed 
to  his  opponent  to  help  get  him  defeated  for  other  reasons,  even 
though  he  might  have  introduced  legislation  for  us. 

So  it  really  had  no  bearing  in  the  consideration  of  who  we  con- 
tributed to  with  TAPE  money  knowingly.  I  am  sure  there  had  to  be 
some  influence,  but  not  knowingly,  nor  w^as  it  discussed. 

Mr.  Sanders.  To  your  knowledge,  would  there  be — ^to  your  recol- 
lection, were  there  any  documents  which  would  have  been  filed  by 
AMPI,  TAPE  indicating  TAPE  payments  or  commitments  to  Con- 
gressmen in  connection  with  the  lobbying  efforts? 


5988 

Mr.  LnxY.  Well,  we  filed  the  TAPE  reports,  and  at  that  time  we 
filed  them  with  the  Clerk  of  the  House  only. 

Mr.  Sanders.  That  would  just  show  the  amounts  paid. 

Mr.  Lilly.  It  would  show  the  amounts.  But  normally  Mr.  Isham 
was  filing  those  reports,  and  as  a  normal  thing  he  would  attach  a  sheet 
on  there  as  to  who  we  had  contributed  to  at  that  particular  time.  He 
would  just  list  everyone,  both  State  as  well  as  Federal  candidates  or 
incumbents,  as  the  case  might  be. 

Mr.  Sanders.  What  I  am  inquiring  about  is  whether  there  would 
be  any  file,  memos,  or  correspondence  that  would  be  more  elaborative 
of  the— — 

Mr.  Lilly.  No.  I  believe  in  the  TAPE  files  in  some  instances — I  do 
not  know  if  it  is  in  1971  or  1970  or — ^but  when  contributions  were  made, 
and  I  might  have  written  a  letter  of  transmittal  transmitting  the 
check  to,  say  the  House  Democratic  Committee  or  the  House  Repub- 
lican Committee,  some  of  the  moneys  might  be  earmarked  x  dollars. 
And  I  do  know  that  I  have  earmarked  x  dollars  for  this  Congressman, 
and  that  Congressman,  or  this  Senator  and  that  Senatx)r.  And  they 
are  a  matter  of  record.  I  mean,  in  my  files.  They  are  not  a  matter  of 
record  here,  but  they  are  in  the  TAPE  files  where  I  would  transmit 
them. 

Mr.  Sanders.  In  your  lobbying  eflFort  with  the  Members  of  Congress, 
were  you  in  addition  to  encouraging  them  to  advance  legislation,  were 
you  also  trying  to  induce  them  to  encourage  the  administration  ? 

Mr.  Lilly.  Yes. 

Mr.  Sanders.  To  tuke  administrative  action  ? 

Mr.  Lilly.  Yes.  As  a  matter  of  fact,  we  got  a  number  of  them  to 
write  to  the  administration,  to  call  the  administration,  and  to  be  on 
record,  to  put  notices  in  the  Congressional  Record.  I  do  not  think  a 
day  passed  that  we  did  not  have  a  number  of  people  get  up  and  speak 
to  that  particular  subject. 

Mr.  Sa  nders.  Would  you  be  able  to  provide  me  anything  from  your 
files  which  would  document  this? 

Mr.  Lilly.  Well 

Mr.  Sanders.  That  narrow,  specific  thing  I  have  just  mentioned. 

Mr.  Lilly.  Well,  I  had  it.  It  is  all  in  mv  files.  Part  of  my  files,  I 
know  that  I  have  not  looked  at^ — I  mean,  they  were  old  files,  1971  is 
what  it  would  be  in.  And  I  know  that  there  is  some  other  litigation 
that  we  were  involved  in.  I  mean,  these  files  are  tied  up  and  I  have 
not  been  permitted  to  look  at  them  even  though  they  are  old  files.  And 
I  think  it  would  be  in  this  particular  thing. 

If  I  could  get  free  from  that,  I  think  I  could  produce  some  informa- 
tion. I  think  I  could  probably  reproduce  it  in  another  way,  and  that 
is  through  Mr.  Stahlbaum,  because  he  is  a  fairly  good  recordkeeper, 
and  he  too  kept  track  ? 

Mr.  Sanders.  Who  has  custody  of  the  files  that  you  have  that  you 
say  are  not  now  available? 

Mr.  Lilly.  I  do  not  know  if  it  is  Uie  Justice  Department  or  the  FBI, 
to  tell  you  the  truth. 

Mr.  Sanders  Here  in  Washington? 

Mr.  Lilly.  No,  in  San  Antonio. 

Mr.  Sanders.  Would  you  ask  Mr.  Stahlbaum 

"^ir.  Lilly.  Stahlbaum. 
Sanders.  Stahlbaum. 


5989 

Mr.  Lilly.  Lyn  Stahlbaum. 

Mr.  Sanders,  To  search  for  material  in  this  respect  ? 

Mr.  Lilly.  I  c-ertainly  will. 

Mr.  Sanders.  And  would  yoii  see  if  you  can  provide  it  for  me? 

Mr.  Lilly.  As  a  matter  of  fact,  I  will  call  him  tx>night. 
Mr.  Nicholas,  Wiio  is  he  ? 

Mr.  Lilly.  He  works  for  CACF,  Central  American  Club  Federa- 
tion. This  is  Mid-Am  DI  and  AMPI.  And  he  works — ^his  office  is  down- 
town, right  across  the  street  from  where  we  are  staying  at  the  hotel. 

Mr.  Nicholas.  Would  the  attorneys  representing  the  antitrust  suit 
be  the  ones  that  would  have  the  files  that  you  are  talking  about  ? 

Mr.  Lilly.  Yes.  They  have  them  now.  I  do  not  think  they  have  those 
particular  files.  They  might  have. 

But  what  I  think  my  files,  that  I  was  referring  to,  are  some  of  those 
they  found  recently.  They  were  old  files  that  I  just  have  not  been 
privy  to  look  at  yet,  and  1  think  that  is  where  they  are. 

But  I  will  check  with  Mr.  Stahlbaum  for  what  you  are  after. 

Mr,  Sandehs.  Just  a  couple  more. 

Do  you  have  knowledge) — do  you  know  of  any  circumstances  indi- 
cating that  Jacobsen  may  have  subsequently  related  to  anyone  the 
details  of  the  conversation  he  had  with  Connally  on  March  15? 

Mr.  Lilly,  I  do  not  know  that  he  would  have  related  to  anyone — 
of  course,  two  other  people  were  involved,  one  of  them  being  Harold 
Kelson,  and  the  other  one  being  Dr.  George  Mehren. 

Mr.  Sanders,  I  am  thinking  of  the  conversation  that  followed  the 
group  conversation. 

Mr,  Nicholas.  He  is  talking  about  the  conversation  when  Mr.  Con- 
nally called  Mr.  Jacobsen  back  and  talked  to  him  privately  in  his 
office,  is  that  right  ? 

Mr.  Sanders.  [Nods  in  the  affirmative.] 

Mr.  Lilly.  Mr.  Jacobsen.  Mr.  Nelson,  and  Dr.  Mehren  were  the  only 
people  to  my  knowledge  that  were,  there.  Neither  Mr.  Nelson  nor  Dr. 
Mehren  have  told  me  that  Mr.  Jocobsen  told  them  what  they  discussed, 
Mr.  Jacobsen  has  ne>ver  said  anything  to  me,  and  in  fact  I  was  not 
aware  of  it  until  last  week  that  this  had  actually  happened. 

Mr.  Sanders.  You  learned  this  from  Mehren  ? 

Mr.  Nicholas.  The  only  likely  party  that  he  would  have  talked  to 
would  have  been  Harold  Nelson. 

Mr.  Ln.LY.  Likely,  if  he  had  talked  to  anyone. 

Mr.  Nicholas.  If  he  had  talked  to  anybody. 

Mr.  Sanders,  Now,  during  the  week  of  March  22,  some  TAPE. 
checks  were  issued  for  some  dinners  ? 

Mr.  Lilly,  Conerresg-ional  fundraising  dinners, 

Mr.  Sanders.  Would  this  have  been  Democrat  and  Republican? 

Mr.  Lilly.  No,  this  was  only  Republican.  The  Democrats  had  one 
that  year,  but  I  believe  theirs  was  a;t  a  later  time.  And  I  believe  you 
will  find  the  records  show  that  wo  contributed  $10jOOO  to  theirs,  too. 

Mr.  Sanders.  Later  in  1971  ? 

Mr.  Lilly.  Yes,  I  believe  it  wafe  later  in  1971. 

Mr,  Sanders.  Off  the  re<'.ord, 

fDiscussion  off  the  record,] 

Mr,  Wettz.  1  think  at  this  point  we  will  recess  until  Friday  morn- 
ing at  9:30. 

[Whereupon,  at  7:50  p.m.,  the  hearing  in  the  above-entitled  matter 
recessed.] 


5990 


I)  i:  If  I  r 


Lilly  Exhibit  No.  1 


Austin,  Texas, 


8- .1-09 


We  are  charging  your  account  as  per  items  below 

For    Receipt  of  $100,  OOP.  pp_ gash  ar.krinu/lpHgpH 


*fe 


IS  1st  gay  of  Auqust7T969  per  instructions 


of  Bob  Isham. 


y    /■ 


By:/  •^•^"'^'<Z^ 


/   ^z. 


PLEASE   SEE   THAT  THE   AMOUNT   IS   DEDUCTED   6H   YOUR 
BOOKS  SO  THAT  OUR  ACCOUNTS  WILL  AGREE. 

APPROVED   BY: 
To: 


AMOUNT/ 
CHARGED 


loo 


000     00 


T.  A.  P.  E. 


MJG 


1\9&B 


Acct.-:C61-101-8' 


is 


/OOIOOQDOOO/ 


5991 


Lilly  Exhibit  No.  2 


"O. 


^Y^--^--^-:^ 


I^L< 


"1-70 


_  x;;i \-^ywv-^      v^'^'"^^^ -r_ ■ ^  _ 


•^ 


J^^M^jlC^^JIa-      (o 


r 


/ ;  \/<,I^L^A^.^i-^' 6v      ,.._     ^ 


X-r 


>  T 


/  r)    /-^  .-I  o 


^^e^tT/^ 


^ 


l^kAJU. 


c^^jM 


-/iJ^Mj^^^ 


Ay     !■=    l-'^^■:Ll-^J■^.^~J<J~..U■ 


f|  ii  _  /T--  c  T.-^     .  >  o^; -J. 


14 -f- 


5992 


Lilly  Exhibit  No.  3 


liikiii       "^"^ 


LILLY,   BOB  A. 


,\^  inmBt  ^ui^ivi  ^5ivtg 


.  AUSTIN.   TEXAS.  . 


12-17 


On  drmmd,  or  i/  no  dmmi  it  mndt  ikm 

Citizens  National  Bank  of  Austin 

One  Hundred  Thousand  and  no/100- 


— dova  «/*«■  *»*«.  f"  vabu  nc*iv*d,  I, 


/'7**^MUl'lJ!^"*'rtt.rtl»^'P*i  "  '■»•'»•'  •*•"  *•>•  •«*  "  promlMd  thalt.  •!  Ik«  «pU«i  o*  ft*  1^*1  Wd 
(•  "     lM«OM».    11   "««   dxlMi  «<•  "Mid   b*'*»<«  "*••  •■4  nMtu.»<l  -)ft*«l  Mlk. 


■p*dfltd  abovv.  lo  appiT  ■"!  '''*d 


:^.3  7*^ 


th«  ll*bil»T  •>  •"*  *>««•'  hartAo  (o 

Tlia  hold*'   l>*r«3f   .1   k*r«br  «irU.ori 
«r  thlMOi  ol   *atM  la  th«  poiMnlom 

Certificate  of  Eeposit  #188 


Al^tCiL 


1JL20_ 


Mr^JJL 


^ 


23^ 


/iJb 


£2^ 


^/  ^^.s^ 


■jj- 


K- ,-  I ) 


A 


f'^/f,!/^  /^.y^ ZM^ 


1011  N.  W.   Military  Road,  San  Antonio,  Texas_ 


\no. 


»-  1    '    '  ><-  AUSTIN.    TEXAS. 


,  "^.V. A_ 


g-/?-  /t^' 


^  On  (ftfmoTWJ,  or  if  no  demand  u  nutd«  tAen £C 


~4fay«  a/C«r  dat«,  /or  vatua  rwtivtdj  J, 


Citizens  Nationai.  Bai?k  of  Austin 

OKC    rv.M-1/..v.l    Sf-vir>..  Mo.v..\acJ   Ci^ry   Zi'^\.\    ^i.2//cf Collars 

m«n*y  ol  Iti*  United  5UU*  «l  Amarfu  vftfa  Intmit  th««>n  •!  tfc«  rate  ol  ^  '/V  »ot  caat  par  aaMm.  In  Um 
nola  li  ptacad  with  an  aUofitvr  fof  Mllactlaa,  er  If  collactad  by  tolt  or  Uuoogh  piebala.  banbapter  «r  otkaf  |«d>- 
••dlngt.   tKa   andanlsMvd   aflr«a   to   pay   19^    •ddHIoml  on  tha  prtaclpot  aad  intorati  dy«  m  attonwr't  faak    F^ilara 


,   pn»ta(t,   damaad. 


V  haraof,  ai  ipvrjriad  ab«n,  to  apply  ur  «»■ 
I  aar  ol  Um  partia*  lUWa  b«raoa.  le  IfcrM^ 
r  nwfa  SkwHt  AgrawMMlt.  /    <?         >^ 


i(^ 


^ 


^mnr 


r 


Z; 


¥ 


Z' 


'/S/'  a  ^yL        -^P 


.^^ 


dciU4- 


5993 


On  dsvumd. 


12'UiS                         LILLY,   Bob  A. 
austin,  texas. 

(A™ 60 


4-lS 


t  dvmand  5 


-days  after  d-ale,  for  vaiue  r«ceiv«d. 

Citizens  National  Bank  OF  Austin 

--Fifty  One  Thousand  Seven  rfuffi-'eTSixty  Eight  and  23/100-- 


DOLUARS 
•inum.    In  th* 


1.   >h.   undanlQ 

•H  aer**  t**  P#r  '?•'.   •oditfonjf 

llm»nt  o(  flilK* 

prlncitMl  or  intarait  wh.n  du«  am! 

M«dn»M.    If  Ih 

l«Sal  tK)td*r  of  thii  noU  «t  an. 

«f*.   it  m*.y  d*c 

tfa  the  u-ipald   baranc*  dua  ani 

rantoi   iav»:«tli 

«.4iv«i   gr^c*.    prctut,   dantand.  na 

;t*  ma,   b.  •>! 

rf/or  taking  af 

iMunty  cr  cellataral,  .;r  tha  tubri 

an,   .rgnef    h,r. 

o  for  th.   p«,m.M   of  IhU  not.. 

3(   ii   Kc(«br  •« 

Hiorii»d   and   dlraetad   At  any    tlma 

u*  'n  :h8   pot:» 

lion  of  tha  hotdar  lor  th*  crad'*   o 

Ota.    ThIi  nota  Ii  or  mey  ba  tacur 

..0.7  3/4     p.,..„,n, 

at  throL'oh  prabdi*,  bantnipli 
lal  and  mtara^l  du*  n  Altorn*)-'!  feat,  fjitura 
halF,  at  tha  opi:on  cf  tha  Uael  holdar,  nutura 
a  dabl  or  ant  lacarltr  for  Ua  dab)  |ll  anr| 
rt  notiea  t«  aar  partr  Each  makar.  lorttf.  ai^ 
ntmant  for  paymant  and  cantaats  tfcat  tiia  p»y- 
l  raiaasa  of  any  llabiTity  ha'aunriar  provUad, 
bHIj  or  ullalarar.   ttiall    la   a«   naana>  aHacl 


Certificate  of  ueposit  #*§§#- .^/V 
Renewal  of  11772 

ADDRESS  G.  P.  M.   Eldg.   4i.h  Floor 


raof.  ai  ipacIRad  abeva.  to  appljt^  foadi 
'  »l  ll>a  partial  llabta  ha.^ji^lo  »,,  p,,. 


?SS 


f^ 


^ 


h:4 


•51/768.  23 


^iLUi 


2: 


Tn 


»  Sacuflty   Agraamtnti.  , 


tf  ^.>f 


Y 


'U. 


/ 


Ho  >,5'i     (- 


13{:S9 


LILLY,  .-Bob  A. 


Ju.ne  12 


AUSTIN,    TEXAS, 
Cyn  demand,  or  if  no  demand  m  madf  then 1 


days  after  date,  for  vrlue 

ClTlZEN.S  NATIONAI,  BaNK  OF  AUSTIN 

AUS'flK,  TEXAS 

-Forty  Seven  Thousand  Five  Hundred  Three  and  77/100- 

I  of  AmarTc4  with  Intaratt  tharsen  i 


-isJZCL 

•tceived,  /, 


-DOLLARS 


ly  of  th«  UnHad  Slatai 

>  li  pl«c»d  ■mi\  an  altorr.ay 

igi,   tho   unrfanignad   a^'aa   I 


'   IS*!^    < 


-  o)  t 


bilitr  of  i 


if  tha  legal  hotd 
ly  iti'tf*  tt.e  uipald  balanca  du« 
laraUy  waivat  gtau,  protart,  damai 
>»  (•(tandad  and  r»-a>.-l*ndad  wlthoul 
ng  of  tscurit,  or  collatara).  or  tha 


-    %\Q,M 


caUof7    3/4,    p«  c»nt  par  an»«m.    .nth. 

laelco  by  loit  oi  (hiough  prabtto,  bankruptcy  or  olh»r  judi- 
o"  th«  principal  and  intaratt  dua  £i  attarttay*!  faat.    Failjta 

t  a\  proRi.iao  (hali,  at  Vt<i  option  of  ifia  l»gAl  lioldar,  matura 
Wrftr  deantt  tiia  dabt  of  any  lacurlty  for  tjia  dabi  [<l  iny] 
mdt-j*ad  wllho^  nottca  to  any  party,    tach  frikar.  turrty,  on- 

otlc*  *rtd  praiontmant  for  paymaat  4nd  eonianti  \\\»\  t^•  pay- 

iea   and    without   JalaaM   of   cny   IJabili*?   (laraun^ar    p'ovtdad. 

(itution    of    tocurlty   or   collateral,    tbatll    In    no    mannar   aff«cl 


i«  holder  hfltaM  is  haraby  authoriiad  and  dircclad  at  € 
'  thirtgt  ol  «alu»  Ir  the  pc^iiauion  of  tha  i>ofdar  for  tho 
ant  and  latirfaction  of  thit  not*.    Thli  nota  li  o(  may  ba  laci 

Renewal  of  12438  and  CD#219 


Ann.,..    G-P-M.   Bldg    4th  Floor 
aan  Antonio,  Texas   vaiiltS 


-iin.i.t^ 

Ji    ^! 

\  .    ■" 

::iiF 

no. 

•47.503.77 

n«Tt 

6-15 

.750S 

.77 

^iO,  000 

00     1 

S'&'7C 

.r/// 

^'V."" 

S'^^^  ' 

^ 

J- 

. 

M 

^-C 

n 

!0 

.^>^\ 

tj^' 

.e>* 

' 

f^.^i^' 

i>^ 


'rf  /. 


5994 


K\/o/>.:ii 


LILLY,   BOB  A. 


AUSTIN.    TEXAS. 


8-6 


I  demand  if  ma<le  then— 


-60- 


,eJO 

-days  afUr  date,  /or  value  received,  I, 


Citizens  Nationai,  Bank  of  Austin 

Tliirty-l'our  Thousand  Five  Hundred  IL'leven  and  50/100- 


Unllad  S(«Ui  of  Afnarica  with 

Int«nlt 

d  with  «a 

ttern«T  fof  eoll«ctIo 

.  or  If  c 

Mlanlonst! 

«gr««  to  MY  <(% 

•ddltloA 

kcipal  Of  ii.tif«it  wUn  du«  i 

r    II  lh«  1 

g«l  hold«r  of  th<i  n 

I*  «l  «n 

mJT  dacUr 

•  th»  unpaid   baUac 

du«   an 

M««Miir  « 

■ivM  QfK^  proUit. 

dtnuBd 

b«  •>lM( 

•d  «nd  r*-«tUnd«<l 

vlthowt  ■ 

.Uf.a  oi  M 

<uritr  or  coll«tM«l. 

M     Ih.     «!. 

,..7-3/4 


I   d««mi   lh«   1 


t  tkraogh   preb 

<  and  iatoratt  du«  «i  attofnay't  '••!■  Failtif* 
ill,  4t  th«  vptioB  of  tho  Isgsl  holdar,  matura 
1  Mcurltv  for  th*  daM  (If  any) 
If  M^tT-  ^^  mabar,  wratr,  •»- 
I  aitd  pfaiantmanl  fof  paymonl  »»d  eoMoitti  tkat  tha  p4f- 
ind  wiUiout  i«l*aM  of  aaf  liability  iMrtHador  providad. 
oa    of    wcu/ity   of    coJlaUrel.    ihall    la    no    miuar   affoct 


jfltr  haraof.  ai  ipodfiad  t 


i^'^rr  . 

■  > ' 

-i:. 

NO. 

•.^4^B11.*,0 

DATE 

„,= 

BAUkNCC 

• 

1 

9  V  7^ 

^^  /.-/ 

-'.) 

,'-'\        .'1. 

1 1  V-  ;o 

/s  ^<v 

/.-v  ;-,.•' 

;>. 

9/-.^h. 

'/r^r- 

V  iSr 

Vj^- 

7    / 

% 

-  1 

/J 

/ 

/ 

r' 

••/ 

kkW- 

/^ 

,^ 

i\^'^ 

-^ 

/^y 

or   Ihingi  ol   *«lu«  ti>  lh«   poiiatilon  ol  tht  tioldar  (or  ttifl  cradit  of  account  of  ooy   ol   th*   partiot  ll*bU   hwoon.   to  tho   P*t>^  ^ 

m«M   and   »»l.rf*rtloo   o(  th.t   ooto     TWi  ooto   li  or   n>«r   •»•   i«co»«d   by  ono  or   ntoro  SKUrltf   Aflroom^nU.  /^U(-^       yV      -.  >^  y // 

CDfr219    (Ren.   BaL   Note  13089)  _^^ /r^-^^ ^ ^^^^C  ., 


^/^yn 


,  G.  P.  M.   Bldq. .  4th  Floor.  San  Antonio.  Tex.  78216 


^3/yi 


,a-7f 


On  demand, 

we   OR    EITHER 


daya  after  date,  for  value  received,  /, 


-    ORDER    OF 

Citizens  National  Bank  of  Austin 

y'/'-  /•     AUSTIN,  TEXAS 

..,.>...     7^s^p„„.,p„.' 

luit  Of  through   probata,   banLnplcy   c 


AUSrm,  TEXAS 

d  Statai  of  Amarie*  with  Inlarait  If 
JMd  «or»«  to  pay  IS%  addmon.l 


may   ba   ailandad  , 
tlgnar  tiarato  for 


ii»ad  tfiaK,  at  tha  optio«  of  ih,  Ugal  holdar,  watgra 
Tlrt.'^*  "^'r '  "/  '"'  i«curity  for  tha  dafat  '{II  any) 
w'tnoot  nottca  lo  any  party.    Each  mahar,   turaty    an. 

■I   ..c-,1,  „  «ll.,.,.|.   rt.ll   i,  „   m.»i,Vr  .l(„i 


-r^z/f^ 


►  p^y?^ 


T 


si-rj 


5995 


LILX.Y  Exhibit  No.  4 

fSECUKITY.  AGREEMENT 

(PLEDGE) 

B3b  A.  Lilly 


Debtovs  Name 

lOll  N    W.   ?.giit3ry  Road Ssjj  fiatonij T^xas 

Mail  Address  Cit>'  County  Slate  Zip 

(hereinaffar  called  in  accoidancs  with  the  Uniform  Comineicial  Code— DEBTOR)  for  value  received  hereby  graats  to- 

Clttsstis  Matlonal  Bank  of  Aostln 

Secured  Party's  Name 
(hereinafter  called  iii  accordfnce  with  the  Uniform  Commercial  Code— BANK)  whose  mail  address  is 

i\u3iin  Travis  T-.sas 


City  County  State  Zip 

a  security  interest  :n  and  delivers  to  SECUBED  PARTi'  the  following  descnbed  property  (-.vhich  hereinafter  is  referred 
to  as  COLLATER.\L)  to-witr 

Citk:22is  National  Bank  Tf  Austiii  Csrtiiizate  of  Deposit  Ns.  18S  in  th3 
■    amoiint  of  $l'DO,QOQ.ia  the  aajas  of  Milk  Producers,  iaz. 


to  secure  DEBKJS'S  note  fo  SECURED  PARTY  dated ,  19         .  for  $'      '     -^'^"  -^^ 

DEBTOR  WARRANTS,  COVENANTS  .VNT)  AGREES: 

1.  That  all  financial  or  credit  statements  deposited  with  or  relied  upon  by  SECUKED  PARTY  prior  to,  contemporaneously  with, 
subsequent  to  execution  of  this  Security  Agreement  are  or  will  be  true,  correct,  complete,  valid  and  genuine. 


2.  That  all  investment  securities,  instruments,  chattel  paper  and  any  li-Ve  pioperty  delivered  to  SECURED  PARTY  is  COLLATER.AL: 
(a)  are  genuine,  iree  from  adverse  claims  or  other  security  interest,  default,  prepaymert  or  defenses;  (b)  all  persons  appearing  to  be  obli- 
£ated  thereon  have  authority  and  capacity  to  contract  and  are  bound  thereon  as  they  appear  to  be  from  the  tact  thereof;  and  (c)  the  same 
comply  with  applicable  laws  concerning  form,  content  and  manner  or  pr^paralioD  and  -'.vecutiGn, 

3.  That  DEBTOR  owns  the  COLLATERAL  and  has  the  right  to  transfer  any  interest  therein;  the  COLI.ATERAL  is  not  subject 
to  the  interest  of  any  third  person;  and  DEBTOR  will  defend  the  COLLATERAL  and  its  proceeds  against  the  claims  and  demands  of 
all  third  persons, 

4.  That  DEBTOR  shall  pay  prior  to  delinquency  all  tx\es,  charees.  liens  and  assessments  against  the  COI.LATEf^L,  and  upon 
DEBTOR'S  f.i'lure  to  do  so,  SECURED  PARTY  at  its  option  mjy  pay  any  of  them  and  shall  be  the  sole  iudse  of  the  leRality  or  valid- 
ity thereof  and  the  amount  necessary  to  discharge  the  same.  Such  payment  shall  become  part  of  the  indebtedness  secured  by  this  Secur- 
ity Asreement  and  shall  be  paid  to  SECURED  PARTY  by  DEBTOR  immediately  without  demand,  with  interest  the^on  at  the  rate  of 
ten  per  cent  (ItyTO  per  annum. 


'St  thMeor 

:  inAe  ci 
pa;Qn£nts 


5.  SECUi^ED  PARTY'S  duty  with  reference  to  the  COLL.ATERAL  shall  be  solely  to  use  reasonable  care  in/he  custody  and  pre- 
servation of  COLL.\TER,AL  in  SECURED  PARTY'S  possession,  and  to  receive  collections,  remittances  and  pa-^Hsnts  on  such  COL- 
LATER.AL as  and  when  made  and  received  by  SECURED  PARTY  and  the  SECURED  PARTY  shall  have  the  option  of  applying  the 
amo'int  or  amounts  so  received,  after  deductioni  of  any  collection  costs  incurred,  as  pa>ment  upon  any  indebtedness  of  DEBTOR  to 
SECURED  PARTY  pursuant  to  provisions  of  this  Secunfy  AEreement  or  holdinx  the  same  for  the  account  of  DEBTOR.  SECURED 
PARTY  =ii,i!I  not  be  rc^pon5ibIe  m  any  way  for  any  depreciation  in  the  value  of  the  COLLATERAL  nor  sh.ill  any  duty  of  responsibility 
wh.'^socvpf  r-jt  upon  SECURED  PARTY'  to  take  necessary  steps  to  preserve  rights  against  prior  parties  or  to  enforce  collection  of  the 
COLL.ATERAL  by  legal  proceedings  or  otherwise. 

The  u.i.Tanties,  covenants,  terms  and  at;reement3  on  the  reverse  side  hereof  are  incorporated  herein  and  r 
all  ir.Vnts  and  purposes,  DEBTOR  and  SECUBED  PARTY  as  used  in  this  Security  Agreement  include  the  heii 
istrators.  successors  or  assigns  of  those  parties. 


12-17-63 


MUJi  Prodiicsrs,  Lac. 


by 


cant  gsft^Pai^  RSffg&r 


5996 


DEB* OR  WARKANTS,  COVENANTS  AND  AGREESi  ,.    .. 

*  I.  Title— Except  for  the  security  interest  hereby  granted,  DEBTOR  has,  or  upoa  acquisition  will  have,  full  fee  simple  tide  to  CoUateral 

free  from  any  Iteo.  security  interest,  eocuffibraiice,  or  claim,  and  DEBTOR  will  at  DEBTOR'S  cost  and  expense  defend  any  action 
which  may  affect  SECURED  PAHTTS  security  interest  in  or  DEBTOR'S  tide  to  CoUateraL 

2.  FinnncinK  Statement— That  no  Financinj{  Statement  covering  Collateral  or  any  part  thereof  Is  on  fil&  in  any  public  office  and  at 
SECURED  I'ARTVS  request  DEBTOR  will  join  in  e:tecuting  all  necessary  Financing  StatemenU  in  forau  satiifactory  to  SECUFIED 
PAHTY  and  will  pay  the  cost  of  filing  same  and  will  further  execute  aJl  other  necessary  instrriments  deemed  necessary  by  SECUflED 
PARTY  and  pay  tKe  cost  of  filing  same. 

3.  Sale.  lease,  or  disposidoo  of  CoUatanl— DEBTOR  will  not,  without  written  consent  of  SECURED  PARTY  sell. contract  to  sell,  lease. 
encumber  or  dispose  of  Collateral  or  any  interest  therein  until  this  Security  Agreement  and  all  debts  secured  thereby  have  been  fully 
sati^&ed. 

4.  Assignment  of  Security  Agreemeirt-This  Security  Agreement,  SECURED  PARTY'S  rights  hereunder  or  the  indebtedness  hereby 
secured  may  be  assigned  from  time  to  time,  and  in  any  such  case  the  Assignee  shall  be  entided  to  all  of  the  riRhts,  pnvileges  and 
remedies  granted  in  diis  Security  Agreement  to  SECURED  PARTY,  and  DEBTOR  will  assert  no  claims  or  defenses  he  may  have 
agamsl  SECURED  PARTY  a;'ainst  the  Assignee  except  dio^e  granted  in  diis  Security  A^rreement.  SECURED  PARTY  may  at  any 
time  tranifer  the  Collateral  to  itself  or  its  nominee,  receive  income,  including  money,  thereon  and  hold  the  income  as  Colljleral  ' 
Of  apply  die  income  to  any  of  DEBTORS  indebtedness  to  SECURED  PARTY.  SECURED  PARTY  may  at  any  time  demand,  sue 
for.  collect  or  rr.nke  any  compromise  or  setdemenl  with  reference  to  the  Collateral  as  SECURED  PARTY,  in  its  sole  discretion,  chooses. 
SECURED  PARTY  may  delay  exercising  or  omit  to  exercise  any  nsht  or  remedy  under  this  Security  Agreement  without  waivins  that 
or  any  other  past,  present  or  future  right  or  remedy,  except  in  writing  signed  by  SECURED  PARTY. 

5.  Repurchase  of  Collateral  in  Defauil-DEBTOR  shall  upon  demand  of  SECURED  PARTY  repurchase, 
b-ilr-r-^e  due.  any  Chattel  Paper  subject  to  this  Security  Agreement  in  which  the  account  DEBTOR  i 
and  provisiaos  of  the  note  nnd/or  Security  Agreement  evidencing  said  account. 

6.  Additional  Seeuiity  Interest— DEBTOR  hereby  grants  to  SECURED  PARTY  a  security  interest  in-all  other  property  previously  de- 
livered to  SECURED  PARTY  and  all  property  hereinafter  delivered  to  SECUFiSD  PARTY  for  the  jmrpose  of  securing  any  indebted- 
ness or  obligation  by  DEBTOR  to  SECURED  PARTY.  Collateral  incliKies.-'v.ithout  Irniitations.  DEBTOR'S  reserve  account,  any 
stock  rights,  rights  to  subscribe,  liquidating  dividends,  stock 'dividends  paid  in  "stocks,  any  securities,  or  other  property  which  DEBTOR 
may  hereafter  become  entided  to  receive  on  the  "account  of  DEBTOR'S  ownership  or  interest  in  Collateral  and  all  proceeds  and  sub- 

' '  stitudons  of  Collateral  all  of  whisb-DEBTOR  shall  immediately  deliver  to  SECURED  PARTTand  which  shall  be  held  by  SECURED 
PARTY  in  the  same  manner*  as*  the  ypjperty -originally  deposited  as  Collateral.  The  terms  and  provisions  of  this  paragraph  shall  not 
be  construed  to  mean  that  DEBTOR  is  audionzed  to  sell  or  dispose  of  Collateral  or  any  part  thereorf  without  SECURED  PARTY'S 
consent.  ''  * 

7.  Taze»-DEBTOR  will  pay  promptly  when  due  all  ta.xes  and  assessments  upon  the  Collateral  or  for  hs  use  and  operation. 

f       '8.  Debtor  Includes— Texas  Law  AppUcmbi»-D£BTOR  as  used  in  this  instnunent  shall  be  constmed  as  singular  or  plural  to  correspond 

;.  with  the  rumber  of  persons  executing  this   instrument  as   DEBTOR.    If  more  than  one  person  executes  this  instrument  as  DEBTOR, 

L  their  obligations  under  this  iostmrnent  shall  be  joint  ^nd  several.   Terms  used  in  this  instrument  which  are  defined  in  the  Texas  Uni- 

form  Commercial  Code  are  used  with  the  meanings  as  therein  defined.   The  law  governing  this  secured  transacdon  shall  be  that  of 

the  State  of  Texas  in  force  at  the  date  of  this  instrument.  '   . 

,      9.  Futurt  Indebtedness-The  security  interest  hereby  granted  secures  the  indebtedness  of  DEBTOR  to  SECURED  PARTY,  direct  or 
■  ■  faidirect,  absolute  or  contingent,  due  or  to  become  d'je,  whether  existing  or  hereafter  arising. 

i  10.  Decreve  in  Value  of  CoQaleral-DEBTOR  will,  if  in  SECURED  PARTY'S  judgment  the  CoHaleral  has  jnaterially  decreased  in  value 

i         or  if  SECURED  PARTY  shall  at  any  time  deem  that  SECURED  PARTY  is  ini^cure,  either  RTOvide  enough  addibonal  Collateral 

to  satisfy  SECURED  PARTY  or  reduce  the  total  indebtedness  by  an  amount  sufficient  to  satisfy  SECURED  PARTY.    A  call  for 

*  addibonal  Collateral  may  be  oral  or  by  telegram  or  by  United  States  Mail  addressed  to  the  address  of  the  DEBTOR  shown  on  the 
front  page  hereof. 

;11,  Re-imbursement  of  expenso-At  SECURED  PARTTS  option.  SECURED  PABTY  may  discharge  taxes,  liens,  interest,  or  perform 
;  or  cause  to  be  performed  for  and  in  behalf  of  DEBTOR  any  actions  and  conditions,  obligations  or- covenants  which  DEBTOR  has 
t  failed  or  refos^-to  perform  and  may  pay  for  th>=:  preservation  and  protections  of  Collateral  and  all  sums  so  expended,  including 
but  not  limited,  reasonable  attorney's  -ees  and  other  lethal  expenses  incurred  o-  paid  by  SECURED  PARTY  in  exercising  or  protect- 
ing SECURED  PARTY'S  interest,  righis  and  remedies  under  this  Security  Agreement,  court  costs,  agenfs  fees,  or  commissions,  or  any 
other  costs  or  expenses  shall  bear  interest  from  the  date  of  payment  at  the  rate  of  10%  per  annum  and  shall  be  payable  at  the  place 
designated  in  the  above  described  note  and  shall  be  secured  by  this  Security  Agreement. 

12.  Payment— DEBTOR  will  pay  the  note  secured  by  this  Security  Agreement  and  any  renewal  or  extension  thereof  and  any  other 
indebtedness  hereby  secured  in  accordance  with  the  terms  and  provisions  thereof  and  w-ll  repay  immediately  all  sums  expended  by 
SECURED  PARTY  in  accordance  with  the  terms  and  provisions  of  this  Security  Agreement. 

13.  Change  of  Residence  or  Place  of  Business-DEBTOR  will  promptly  notify  SECURED  PARTY  of  any  change  of  DEBTOR'S  residence, 
or  chief  place  of  bu 


14.  Attomey-in-Fact-DEBTOR  hereby  appoints  SECURED  PARTY  DEBTOR'S  attomey-in-fac*  to  do  any  and  every  act  whi-^i  DEBTOR 
Is  obligated  by  this  Security  Agreement  to  do  and  to  exercise  all  rights  of  DEBTOR  in  Collateral  and  to  make  collections  and  to" 
execute  anv  and  all  papers  and  iristrtunents  and  to  do  all  other  things  necessary  to  preserve  and  protect  CoDateral  and  to  protect 
SECURED  PARTTi'S  security  interest  hi  said  Collateral. 

15.  Time- Waiver— DEBTOR  agrees  that  in  performing  any  act  under  this  Security  Agreement  and  the  note  secured"  thereby  thai  time 
shall  be  cf  the  essence  and  that  SECURED  PARTrS  acceptance  of  par^al  or  delinqui;nt  payments,  or  faUure  of  SECURED  PARTY 
to  etercLse  D"y  right  or  remedy  shall  not  be  a  waiver  of  any  obligation  of  DEBTOR  or  right  of  SECURED  PARTY  or  constitute  a 
waiver  of  any  other  similar  default  subsequently  occurring. 

16.  Default- DEBTOR  shall  be  in  default  under  this  Security  Agreement  upon  tfie  happening  of  any  of  the  following  events  or  condi- 

1.  Default  in  the  payment  or  pcifonnance  of  any  note,  obligation,  covenant  or  Tiab"ni^  contained  or  referred  to  herein; 

2.  Any  warra.nty.  representation  or  statement  made  or  furnished  to  SECURED  PARTY  by  or  in  behalf  of  DEBTOR  proves  to  have 
been  faije  in  any  material  respect  when  made  or  furnished; 

3.  Any  event  which  results  in  the  acceleration  of  the  maturity  of  the  indebtedness  of  DEBTOR  to  others  under  any  Indenture,  agree- 
ment or  undertaking; 

4.  The  mariing  of  any  levy,  seirure,  or  attachment  oF  any  of  the  Collateral; 

5.  Any  time  the  SECURED  PARTY  believes  that  the  prospect  of  payment  of  any  indebtedness  secured  hereby  or  the  performance 
of  this  Security  Agreement  is  impaired; 

6.  Df-ath,  dissolution,  termination  of  eristcnce,  insolvency,  business  failure,  appointment  of  a  receiver  for  any  part  of  the  Collateral 
ossiRnrnt-nt  for  the  benefit  of  creditors  or  the  commencement  of  any  proceeding  under  any  bankruptcy  or  insolvency  law  by  or 
against  DEBTOR  or  any  guarantor  or  surety  for  DEBTOR. 

17.  R^rf.edif^-l'-jnn  the  occurrence  of  any  such  event  of  default,  and  at  any  time  thereafter.  SECURED  PARTY  mny  declare  all  obligations 
\tCir!  d  '  ■.-•  Hv  immediately  due  and  pavaM"  and  m.iy  proceed  to  enforce  p;i>Tnenl  of  the  same  and  exercise  .Tny  and  all  of  the  rights 
.::..!  r-.-,.  ::r>  Vr-..  uled  by  the  Uniform  "Oniimrrcial  C-id..-  of  Texas,  a:,  well  a.  all  other  rights  and  remedies.  po!,ses,*-d  by  SECURED 
Pa:;:V  Sf^-'nKD  party  may.  at  SECCRF.D  PAH7VS  option,  sell,  assitn  and  deliver  all  or  any  part  of  Collateral  at  any 
E.-<.li<T*s  ?;...:<!  .T  at  p-iblic  or  private  s.ilc,  ■-.  ;th,.iit  written  notit.-  nr  aJvrr'isrmi-nl  ami  hid  and  become  ptirchasor  .it  any  public 
^..l-  or  nt  .u>v  n.-.iv'r's  R..ard.  If  noli  p  to  DIT.TOn  is  required  hv  t'v  I'tnfonn  Cntnmrrcial  CnrV  of  Ti  \  k  nf  pnh'ic  or  pri>-atc 
sil-  i.f  anv  p.rt  of  t:oII..t-:raI,  Oi  to  that  part  „i  Coll.iN'ral  which  the  l"uif..im  Cnminei^ial  Code  of  Texas  requires  said  notice.  SE- 
CURED i'AHTV  utU  cive  DEBTOR  rcasonabh-  notice  of  the  time  and  place  of  any  public  or  pnvate  sal*-  thereof  and  the  require- 
ments of  f..iv.n.hk'  notice  shall  be  met  if  such  notice  is  mailed,  postacc  prepaid,  to  the  address  of  DEBTOR  shown  at  the  hegin- 
rin-  nf  thi-i  S.turity  Agreement  at  least  five  t'y)  d.ivs  before  (he  time  of  ih**  salr.-  of  disposition.  SECURED  PAHTY  may  apply  the 
procc  ds  of  any  diiposttion  of  Collater.il  available  lor  satisfaction  of  DEBTOR'S  indebtedness  and  the  expenses  of  sale  in  anv  order 
of  ptcferr-nce  which  SECURED  PARTY,  in  SECURED  PARTY'S  sole  discretion  possesses.  DEBTOR  shall  remain  liable  for  any 
deficiency. 


5997 


Lilly  Exhibit  No.  5 

SECURITY  AGREEMENT 

(PLEDGE) 


T.  A.  P.  E.  for  benefit  of  Bob  /■.  Lilly 


Debtors  Name 

1011  N.   V/.  i.lilitary  High'^iay Bexar L-an  Antjolo,  Te^as 

Mail  Address  City  County  State  Zip 

(hereinafter  called  in  accordance  with  the  Uniform  Commercial  Code— DEBTOR)  for  value  received  hereby  grants  to 

Citizens  national  Bank 

Secured  Party's  Name 
(hereinafter  called  in  accordpnce  with  the  Uniform  Commercial  Code— BANK)  whose  mail  address  is 

P.  O.  Box  4  j9d  Austin Travis    Texaa 

City  County  State  Zip 

a  security  interest  in  and  delivers  to  SECURED  PARTY  the  following  described  property  (which  hereinafter  is  referred 
to  as  COLLATEIUL)  to-wit: 

One  (1)  Citizens  National  Bank  of  Austin  Certificate  o:  Deposit  Mo.  CD219 
lor  5:100, 000. 00  issued  to  T.  A.  P.  E, 


to  secure  DEBTOR'S  note  to  SECURED  PARTY  dated 12-17-69 ^  jg f^^  jJ00j00a^0_ 

DEBTOR  WARRANTS,  COVENANTS  AND  AGREES: 

1.  That  all  Gnancial  or  credit  statements  deposited  with  or  relied  upon  by  SECURED  PARTY  prior  to,  contemporaneously  with, 
subsequent  to  execution  of  this  Seowrity  Agreement  are  or  will  be  true,  correct,  complete,  valid  and  genuine. 


2.  That  all  i-vestment  securities,  instruments,  chattel  paper  and  any  like  property  delivered  to  SECURED  PARTY  as  COLLATERAL: 
(a)  are  genuine,  free  from  adverse  claims  or  other  security  interest,  default,  prepayment  or  defenses,  (b)  all  persons  appearing  to  be  obli- 
gated thereon  have  authority  and  capacity  to  contract  and  are  bound  thereon  as  they  appear  to  be  from  the  fact  thereof;  and  (c)  the  same 
comply  with  applicable  laws  concerning  form,  content  and  manner  or  preparation  and  execution. 


3.  That  DEBTOR  owns  the  COLLATERAL  and  has  the  right  to  transfer  any  interest  therein;  the  COLLATERAL  is  not  subject 
to  the  interest  of  any  third  person;  and  DEBTOR  will  defend  the  COLLATERAL  and  its  proceeds  against  the  claims  and  demands  of 
all  third  persons. 

4.  That  DEBTOR  shall  pay  prior  to  delinquency  all  taxes,  charges,  liens  and  assessments  against  the  COLLATERAL,  and  upon 
DEBTOR'S  failure  to  do  so.  SECURED  PARTY  at  its  option  may  pay  any  of  them  and  shall  be  the  sole  judge  of  the  legality  or  valid- 
ity thereof  and  the  amount  necessary"  to  discharge  the  san"  ^  ^uch  payment  shall  become  part  of  the  indebtedness  secured  by  this  Secur- 
ity Agreement  and  shall  be  paid  to  SECURED  PARTY  b)  ^  ^BTOR  immediately  without  demand,  with  interest  thereon  at  the  rate  of 
ten  per  cent  (10%)  per  annum. 

5.  SECURED  PARTY'S  duty  with  reference  to  the  COLLATERAL  shall  be  solely  to  use  reasonable  care  in  the  custody  and  pre- 
servation of  COLLATERAL  in  SECURED  PARTY'S  possession,  and  to  receive  collections,  remittances  and  payments  on  such  COL- 
LATERAL as  .-.nd  when  m.ide  and  received  by  SECURED  PARTY  and  the  SECURED  PARTY  shall  have  the  option  of  applying  the 
amount  or  amounts  so  received,  after  deductions  of  any  collection  costs  incurred,  as  payment  upon  any  indebtedness  of  DEBTOR  to 
SECURED  PARTY  pursu.<nt  to  provisions  of  this  Security  Agreement  or  holding  the  same  for  the  account  of  DEBTOR.  SECURED 
PARTY  shall  not  be  responsible  in  any  way  for  any  depreciation  in  the  value  of  the  COLLATERAL  nor  shall  any  duty  of  responsibility 
whatsoever  rest  upon  SECURED  PARTY  to  take  necessary  steps  to  preserve  rights  against  prior  parties  or  to  enforce  collection  of  the 
COLLATERAL  by  leg.il  prnceedings  or  otherwise. 


I 


\  The  warranties,  covtnants.  terms  ;incl  agreements  on  the  reverse  side  hereof  are  incorporated  herein  and  mnde  a  part  hereof  foi 
a{\  intents  and  purposes  DEBTOR  and  SECURED  PARTY  as  used  in  this  Security  Agreement  include  the  heirs,  executors,  or  admin- 
istrators, successors  or  assigns  of  those  parties. 

Al'  ri;"-r(.r.':cs  to  LhETOF  E.hali  also  be  ani  livable  to  OWIIZE  CF  CCLLATEPAL. 

Dated ^^-^?-«9  . 

Trust  for  Agricultural  Political  Education 
By.  ^  _     .   ,      ,         Trustee 


Signature  of  DEBTOR />^V>iNZi^   OF 

COLLATERAI 


30-337  O  -  74  -  10 


5998 


DEBTOR  WARRANTS.  COVENANTS  AND  ACREESj 

1.  Title— Except  foe  the  security  interest  hereby  granted.  DEBTOR  has.  or  upon  acquisition  will  have,  full  fee  simple  title  to  CoUaf^n^l 
free  from  anv  lien,  security  interest,  encumSiance,  or  claim,  and  DEBTOH  will  at  DEBTOR'S  cost  and  expense  defend  any  .iction 
which  may  affect  SECURED  PAfiTV'S  hecurity  interest  in  or  DEBTOH'S  btJe  to  Collateral. 

2.  Financing  Statement— Tliat  no  f  tnanciDR  Statement  covering  Collateral  or  any  part  thereof  is  on  file  iit  any  ptiWic  office  and  «r 
SECURED  PARTY'S  request  DEBTOR  wiJl  join  in  executing  all  necessdiy  Finunt-iDR  Stateuienti  m  fonr.is  satafactory  to  SECUSED 
PART  Y  and  «iU  pay  the  cost  of  filing  same  .^od  will  further  execute  all  other  necessary  iiulrumens  deemed  net-evary  by  SECURED 
PARTif  and  pay  the  cost  of  filing  same. 

3.  Sale,  lease,  or  dispositiofi  of  Collateral- DEBTOR  will  not,  without  written  conwnt  of  SECURED  PARTY  seU.contrect  to  sell,  lease, 
encumber  or  dispose  of  Collateral  or  ^ny  interest  therein  until  this  Security  Agreement  and  sll  debts  securt'd  th«»reby  have  been  fully 
satisfied. 

4l  Assignment  of  Security  Agreement-This  Security  Agreement.  SECURED  PARTY'S  rights  hereunder  or  the  indebtedness  Iwieby 
-  secured  may  be  assigned  from  time  to  lime,  and  in  any  such  case  the  A^signee  shall  be  cntHled  to  all  of  the  rights,  privileges  and 
remedies  gtanied  in  this  Security  Agreement  to  SECURED  PAR1T.  .ina  DEBTOR  will  assert  no  cloims  or  deferv-es  •>e  mjy  hav- 
against  SECURED  PARTY  against  the  ^.^signec  except  those  granted  in  this  Security  Ajreemenl.  SECUPED  PARTY  may  at  any 
time  transfer  the  Collateral  to  iUit'if  or  its  nommee,  rtceive  income,  including  money,  therwrn  and  hold  :he  income  as  Collateral 
or  apply  the  income  to  any  of  DEBTOfi'S  indebtedness  to  SECURED  PARTT  SECUP.ED  PARTY  may  at  jn>  hrae  demand,  sue 
for,  collect  or  make  any  compromise  or  settlement  with  reference  to  the  Collateral  as  SECURED  PARTT.  in  its  sole  discretion,  chaises. 
SECURED  PARTY  may  delay  exprcisinR  or  omit  to  exercise  any  rijihl  or  remedy  under  this  Security  Agreement  without  wn;vjnR  that 
or  any  other  past.  pre:>enl  or  future  liijht  or  remedy,  except  in  writing  signed  by  SECURED  PVRTY. 

5.  Repurchase  of  Collateral  in  DefauU-DEDTOR  -Jiaii  upon  dt^mand  of  SKCL'RED  PARTY  repurchase, 
balance  due,  aiw  Chattel  Paper  subject  to  this  Secunty  Agreement  in  which  the  account  DEt^TOK  i 
and  provisions  of  tlie  note  and/or  Security  Agreement  evidencing  said  account. 

6.  Additional  Securitv  Interest— DEBTOR  hereby  grants  to  SECITRED  PARTY  a  security  interest  in  all  other  property  previna<;ty  de- 
livered to  SECUP^D  PARTY  and  ail  prnperty  hereinafter  delivered  to  SECURED  P.^RTY  for  the  purpose  of  securing  any  indebted- 
ness or  obligaboa  by  DEBTOR  to  SECURED  PARTY  Collat.:ral  inchi^es,  without  Imutations.  DEBTOR'S  reser\e  actount.  any 
stock  rights,  rigiits  to  subscribe,  liquidating  dividends,  stock  dTvidends  paid  in  stocks,  any  securities,  or  other  property  which  DEBTOR 
may  hereafter  become  entitled  to  receive  on  the  account  t>f  DEBTOR'S  owuershio  or  interest  in  Collaterrd  ami  a!!  proceeds  and  sub- 
stitutions of  CoHalerai  all  of  which  DEBTOR  shall  immediately  deliver  to  SECURED  PARTY  and  whicK  shall  be  held  by  SECURED 
Party  in  the  same  manner  as  the  property  originally  deposited  as  Collateral.  The  terms  yid  provisions  of  this  paragraph  shall  nf>t 
be  construed  to  mean  that  DEBTOR  is  authorized  to  sell  or  dispose  of  Collateral  or  any.  part  thereof  without  SECURED  PARTY'S 
consent. 

7.  Taxes— DEBTOR  will  pay  promptly  when  due  all  taxes  and  assessments  upon  the  Collateral  or  for  its  use  and  operation. 


8.  Debtor  Includes— Texas  Law  Applicable— DEBTOR  as  used  in  this  instrument  shall  be  t.-onstnied  as  singuJir  <;r  pturaJ  to  ooiTcspond 
with  the  nimiber  of  persons  executing  this  instrume-'it^  as  DEBTOR.  If  more  than  one  person  executes  this  instmrnent  as  DEBTOR, 
their  obligations  under  this  instn-ment  shaU  be  joint  and  sexeral.  Terms  used  in  (his  instrxunent  which  are  defined  in  the  Texas  Uni- 
form Commercial  Code  are  used  with  the  meanings  as  therein  defined.  The  law  governing  this,  secured  transaction  shall  he  that  of 
the  State  of  Texas  in  force  at  the  date  of  this  insL'ument. 

9.  Future  Indebtedness-The  security  mterest  hereby  granted  secures  the  indebtedness  of  DEBTOR  to  SECURED  PARTY,  direct  or 
indirect,  absolute  or  contingent,  due  or  to  become  due,  whether  existing  or  hereafter  arising. 

10.  Decrease  in  Value  of  Collateral-DEBTOR  will,  if  in  SECURED  PARTY'S  judgment  the  Collateral  has  materially  decreased  in  value 
or  if  SECURED  PARTY  shall  at  any  time  deem  that  SECURED  PARTY  is  insecure,  either  provide  enough  addiHonal  Collateral 
to  satisfy  SECURED  PARTY  or  reduce  the  total  indebtedness  by  an  amount  sufficient  to  satisfy  SECURED  P.-CRTY.  A  call  for 
additional  Collateral  may  be  oral  or  by  telegram  or  by  United  States  Mail  addressed  to  the  address  of  the  DEBTOR  shown  on  the 

front  page  hereof. 

11,-Re-imbursement  of  expenses-At  SECURED  PARTY'S  option,  SECURED  PARTY  may  discharge  taxes,  liens,  interest,  or  perform 
or  cause  to  be  performed  for  and  in  behalf  of  DEBTOR  any  actions  and  conditions,  obligations  or  covenunts  which  DEBTOR  has 
failed  or  refused  to  perform  and  may  pay  fr-r  the  preservation  and  protections  of  Collateral  and  al!  sums  so  expended,  including 
but  not  limited,  reasonable  attorney's  fees  and  other  legal  expenses  incurreil  or  paid  by  SECURED  PARTY  in  exercntng  or  protect- 
ing SECURED  PARTY'S  interest,  rights  and  remedies  under  this  Security  Agreement,  court  costs,  agent's  fees,  or  commissions,  or  any 
other  costs  or  expenses  shall  bear  interest  from  the  date  of  pavment  at  the  rate  of  10%  ptr  annum  and  shall  be  payable  at  the  place 
-  designated  in  the  above  described  note  and  shall  be  secured  by  this  Security  Agreement. 

13.  Payment— DEBTOR  will  pay  the  note  secured  by  this  Security  Agreement  and  any  renewal  or  extension  thereof  and  any  other 
indebtedness  hereby  secured  in  accordance  with  the  terms  and  provisions  thereof  and  will  repay  immediately  all  sums  e.xpended  by 
SECURED  PARTY  in  accordance  with  the  temis  and  provisions  of  this  Security  Agreement. 

13.  Change  of  Residence  or  Place  of  Business-DEBTOR  will  promptly  notify  SECURED  PARTY  of  any  change  of  DEBTOR'S  residence, 
or  chief  place  of  business. 

14.  Attomey-in-Fact-DEBTOR  hereby  appoints  SECURED  PARTY  DEBTOR'S  attorney-in-fact  (o  do  any  and  every  act  which  DEBTOR 
is  obligated  by  this  Security  Agreement  to  do  and  to  exercise  all  rights  of  DEBTOR  in  Collateral  and  to  make  col!eciior«  and  to 
execute  any  and  nil  papers  and  instruments  and  to  do  all  other  things  necessary  to  preserve  and  prelect  Collateral  ai>d  to  protfect 
SECURED  PARTY'S  security  interest  in  said  Collateral. 

15.  Time-Waiver— DEBTOR  agrees  that  in  performing  any  act  uT«3er  this  Security  Agreement  and  the  note  secured  thereby  that  lime 
shall  be  of  the  essence  and  that  SECURED  PARTYS  acceptance  of  partial  or  delinquent  payments,  or  failure  of  SECURED  PARTY 
to  exercise  any  right  or  remedy  shall  not  be  a  waiver  of  any  obligation  of  DEBTOR  or  right  of  SECURED  PARTY  or  constitute  a 
waiver  of  any  other  similar  default  subsequently  occurring. 

16.  Default— DEBTOR  shall  be  in  default  under  this  Securit>'  Agreement  upon  the  happening  of  any  of  the  following  events  or  condi- 


1.  Default  in  the  payment  or  jierformance  of  any  note,  obligation,  covenant  or  liability  contained  or  referred  to  herein; 

2.  Any  warranty,  representation  or  statement  made  or  furnished  to  SECURED  PARTY  by  or  in  behalf  of  DEBTOR  proves  to  have 
been  false  in  any  material  respect  when  made  or  furnished; 

3.  Any  event  which  results  in  the  acceleration  of  the  maturity  of  the  indebtedness  of  DEBTOR  to  others  under  any  indenture,  agree- 
ment or  undertaking; 

4.  The  making  of  any  levy,  seizure,  or  attachment  of  any  of  the  Collateral; 

5.  Any  time  the  SECURED  PARTY  believes  that  the  prospect  of  pavinent  of  any  indebtedness  secured  hereby  or  the  performance 
of  this  Security  Agreement  is  impaired; 

8.  De  uh,  dissolution,  termination  of  existence,  insolvency,  business  failure,  appointment  of  a  receiver  for  any  part  of  the  Collateral 
assignment  for  the  benefit  of  creditors  or  the  commencement  of  any  proceeaing  under  any  bankruptcy  or  insolvency  law  by  or 
against  DEBTOR  or  any  guarantor  or  surety  for  DEBTOR. 


,  Remedies-Upon  the  occurrence  of  any  such  event  of  default,  and  at  any  time  thereafter.  SECURED  PARTY  mny  declare  all  obligations 
secufd  hereby  immediately  due  and  payable  and  may  proceed  to  enforce  pa>'ment  of  the  same  and  exercise  any  and  all  of  the  rights 
and  remedies  provided  by  the  Uniform  Commercial  Code  of  Texas,  as  well  as  all  other  rights  and  remedies  possessed  by  SECURED 
PARTY.  SECURED  PARTY  may,  at  SECURED  PARTY'S  option.  s,-II.  a-isi-n  and  deliver  aH  or  any  part  of  Collateral  at  any 
Broker's  Bo.ird  or  at  public  or  pri\ntfi  sale,  without  written  notice  or  .id%erti'!empnt  and  bid  and  become  purch.Tser  ,it  any  public 
sale  nr  at  any  Brokers  Board.  If  notice  to  DEBTOR  is  required  by  tht-  Uiulorm  Commercial  Code  of  Texas  of  public  or  private 
sale  of  any  part  of  Cxillateral.  as  to  that  part  of  Collateral  which  the  Uniform  Commerci.d  Code  of  Te.xas  requires  said  notice,  SE- 
CURED PARTY  will  give  DEBTOR  reasonable  notice  of  the  time  and  place  of  any  public  or  private  sale  thereof  and  the  require- 
ments of  reasonable  notice  shall  be  met  if  such  notice  is  mailed,  postage  prepaid,  to  the  address  of  DEBTOR  shown  at  the  begin- 
ning of  this  Security  Agreement  at  le.ist  five  f5)  days  before  the  time  o(  the  sale  of  disposition.  SECURED  PARTY  may  apply  the 
proceeils  of  any  disposition  of  Colbteral  available  for  satisF.iction  of  DEBTOR'S  indebtedness  and  the  expenses  of  sale  in  any  order 
of  preference  which  SECURED  PARTY,  in  SECURED  PARTYS  sole  discretion  possesses.  DEBTOR  shall  remain  liable  for  any 
deficiency. 


5999 


Lilly  Exhibit  No.  6 


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Lilly  Exhibit  No.  8 


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6004 


Lilly  Exhibit  No.  9 


jACOFsSEra  a  I  ONG 


January  6,    1970 


Mr.    Bob  Lilly- 
Associated  Milk  Producers,    Inc. 
1011  N.  V/.    Military  Highway 
San  Antonio,    Texas 

Dear   Bob: 

Subject:     Cause  No.    68-H-930,    Marketing 
Assistance  Plan,    Lie.  ,    e.t  al  v. 
South  Texas   Producers  Association, 
et  al 

Enclosed  is  our  bill  for  services  rendered  in  connection 
with  the  captioned  case,    as  we  discussed. 


SEMbR.  B  JACOBSEM 
I15B  riFTLtfrin  5t.,>-1.W. 
\V/v5HlMCrro>^.  D.  C.20005 
203-6S9-2&00 


With  best  wishes. 


Sincerely  yours, 


JRL:eqb 
Enclosure 


Jake  Jacobsen 


Gary  Evatt.  y\s50ciATiE 


6005 


o^^ 


P^ 


Jacobsek'  &  Long 

x-tsTX^TT.  SfcMIiK  <3  jACOD5£>: 

'O- BOX  222  115S  FIFTIEMTM  5r..»..W. 

^USTI^J.TEX^^  7S767  WXsMIMcroN.  D.  C.  3000& 

il2-47a-II3l  20S-6S9-2e00 


January  6,    1970 


Associated  Milk  Producers,    Inc. 
1011  N.  W.    Military  Highway 
San  Antonio,    Texas 

Attention  Mr.    Bob  Lilly 


For  professional  services  rendered  in 

connection  with  Cause  No.    68-H-930 

Marketing  Assistance  Plan,    Inc.  ,    et  al 

V.    South  Texas  Producers  Association, 

et  al $10,000.00 


Thank  you. 
eqb 


Jake  Jacobsen  Joe  R..Lonc  Gary  Evatt.  Associate 


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SI2--J72-1I3I 


Lilly  Exhibit  No.  10 

Jacobs  EN  ©  Long 


April  21,    1970 


Mr.    Bob  Lilly 

Associated  Milk  Producers,    Inc. 
1011  N.  W.    Military  Highway 
San  Antonio,    Texas  78213 

Dear   Bob: 

Enclosed  is  the  bill  with  regard  to  Associated  Milk 
Producers,    at  al.    v.    Texas  Animal  Health  Com- 


Semer  a  Jacobsen 

use  FlFTEEtwTM  St.,N.W. 

iW'AJHiNcn-ow,  D.  C.  20005 
2oa-650-2000 


mission  which  you  requested. 
With  best  wishes. 


JRL:eqb 
Enclosure 


Jake  Jacobsen 


Joe  R.Lonc 


Gary  Evatt.  Associate 


6008 


JACOBSEW  &  LON'C 


P.  O.  Sox  £22 
AusTil-i.TEXA-i  7e'^67 
513-^72113! 


SEMEB.  a  JACOBSEIM 
Illife  FirrtewTM  ST.,M.\(^. 
\X-AiHrlsiCTON.  D.C.2OO05 
202-SS9-3S00 


AprU  21,    1970 


Associated  Milk  Producers,    Inc. 
1011  N.    W.    MUltary  Highway 
San  Antonio,    Texas  78213 

Attention  Mr.    Bob  Lilly 


For  professional  services  rendered  in 
connection  with  Cause  No.    179,  227, 
Associated  Milk  Producers,    et  al.    v. 
Texas  Animal  Health  Commission,    et  al. 


$10,000.00 


Thank  you. 


eqb 


7     /^    ^ 


Jake  Jacoosem 


Joe  R.Lonc 


Cary  Evatt.  Associate 


6009 


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Lilly  Exhibit  No.  11 

Jacobsen  a  Long 

WfrrcATI  ■  S£MhR.,WHlTE    a  JACOBSEN 

P.O.BOX  22S  I15S  FiFTiihrrM  S-.  .hi.W 

AU3T1vi,TEXA3  7S7e,7  >X'AJMIlJCTON.D.  C  20005 

iil2--«7S-H.'^l  20a-63©-2000 

July  16,    1970 


Associated  Milk  Producers,    Inc. 
1011  N.  W.    Military  Highway 
San  Antonio,    Texas 


For  professional  services  rendered  in 

connection  with  Cause  No.    179,  227, 

Associated  Milk  Producers,    et  ai  v. 

Texas  Animal  Health  Commission,    at  ai  .     .$10,000.00 

For  professional  services  rendered  in 
connection  with  matters  pending  before 
the  State  Health  Department 6,  000.  00 

For  professional  services  rendered  in 
connection  with  cooperatives  in  Minne- 
sota    b,  000.  00 

Total  $22,000.00 

Thank  you. 
eqb 


■  _  CMS"-    • 


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Fake  Jacobsem  Joe  R..Lonc  •  Gary  Evatt   Associate 


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Lilly  Exhibit  No.  12 

Jaccb.'Sen'  ft  Long 


Semer. White  8  .Iacobsen 

VJCashimcton,  O.  C.  2000S 
202-6S9-2900 


August   51,     1970 


Mr.    Bob  Lilly 

Associated  Milk  Producers,    Inc. 
1011  N.  W.    Military  Highway 
San  Antonio,    Texas 

Dear   Bob: 

I  enclose  our  statement  for  services  rendered  in  ac- 
cordance with  our  conversation  of  last  week. 

With  best  wishes. 


Sincerely  yours. 


Joe  R.    LonE 


JRLreqb 


Jake  Jacobsln 


Joe  R.  Lonc 


Carv  Evatt.  .Associate 


6013 


\  *  P.O.Box  22; 


Jacobsen  a  Long 


August  31,    1970 


Semer.. White  8  Jacobsen 


WA4H1S1CTOM.  D.  C.  2000S 
202-6S9-Be00 


Associated  Milk  Producers,    Inc. 
1011   N.    W.    Military  Highway 
San  Antonio,    Texas 


For  professional   services  rendered  in 

connection  with  Cause. No.     179,  227, 

Associated  Milk  Producers,    et  al  v. 

Texas  Animal  Health  Commission,    et  al  .     .$   8,000.00 

For  professional  services  rendered  in 

connection  with  the  drafting  of  bills  to  be 

presented  to  the  Texas  Legislature  and  for 

preliminary  committee  work  with  regard 

to  same 12,000.00 


For  professional  services  rendered  in 
connection  with  research  for  opinion  re- 
quest to  the  Attorney  General  of  Texas   . 


2,  0afJ,00 


Total 


$22,  OilO^OO 


Thank  you. 


eqb 


CHARGE    ACCOUNT   NO. 
AfPROVEO  fOR  PATMr:NT 
CHK.<tD  HGli^ES 
PAID   -   CHECK   NO. 


Jake  Jacobsen 


^JOE   R.LONC 


TT,  Associate 


30-337   O  -  74  -   11 


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6015 

Lilly  Exhibit  No.  13 

-December  22,  1969 


Dear  Harold: 

Per  my  diBcusslon  todr.y  with  Bob  Lilly,  I  am 
BUbnltting  the  eaclosed  invoice.  ■ 

With  best  personal  wishes. 

Sincerely  3, 


Ted  Van  Dyk 


Mr,  Harold  Kelson 

Milk  Produc ero.  Inc. 

1011  IW  iiilitary 

San  Antonio,  Texas  782I3 


Enclosure 

bee:  Bob  Lilly 


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ttOXi   Te3-3337 


December  22,   I969 


TO:     Milk  Producers^  Inc. 
1011  NW  Military 
San  Antonio,  Texas  78213 


Expenses,    OctoTDer-December,    I969 
Retainer,    January-March,    I970  $18,050 


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REQUEST    FOf    CHECK 


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APPROVED  BY 


6018^ 
Lilly  Exhibit  No.  14 

•  '  ..   "     TkO  VaM  J)tK   AM»iutUTK.H.   Lst.  ^   216 

^.^;   i  1kAKHl>ini'<i.\.  |>.  «.      Kuu.ia  .    " 

iui'o.Vuw..."^  .Bob:A.  UXi*--      -    -  ;.  J...'.     .:.",..  t  \9»'N0,C>'1 

^^  jeti  Thouaand  Dollars  ontf  0O/l00»-»— -—•«--»•«— ——-» — .,..«...  p„|^^,„^ 

I  y j;     '  t«»  »*•  »t»  4«»M>-MI«».  Bl'. 


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6019 
Lilly  Exhibit  No.  15 

Anthony' Nicholas  Copy  1969  Form  1099 


Ted  Van  Dyk  Associates,  Inc.  izz^  sevebteentw  street,  n.w. 

WASMtNGTON,  D.  C.    20036 
(202)    7B3-3337 


March  10,  1970 


Dear  Bob:  : 

As  .protection  for  both  .of  us,  you  will  be 
receiving  a  withholding  slip  for  the  $10,000- 
just  as  I 'received  one. 

That  closes  the  circle  and  keeps  us  beyon-d 
.question. 

Hope  to  see  you  soon. 

W.ith  best  wishes. 


Sincerely, 


Mr.  Bob  A.  Lilly 
Associated  Milk  Producers,  Inc. 
-lOll  N.  W.  Military 
Saji  Antonio,  Texas  '78213 


I 


6020 


Form  t03?pjJ.S.  INFORMATION  RETURH  FOR  O^DAR  YEAR  1869  Copy  a 

^-^  (S«  inii,uciion<  on  Form  1096)  Fof  Internal  RevDHus  Se:.  t: 


nitstsi 

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b,  to. 

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6.  Annuitiei,  p»nsrons, 
ind   oiner   l.ied   or 
dtlermiflibU  incomb 

foreign  I'l-ni.  (r.i 
W-2  ilen.i 



1.  Croii  dividends  and 
«lhtr     distributions 
en  ilock 

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TO    WHOM    PAID  TYr.orpi.nlcon,.  ,.ndoddr...(iccloi!oaP  COM.    Uoccounll.    3   BY    WHOM    PAID     (Nimr.    iJdreM    (include    ZIP    eoJO.    ind 


I    lor  mull.pl.  poy.oi  w.lh  diir.iort  .^t„amr,  or  II  iocludoi  ihc  oomo  ol  a   i.duc.ory.  Iioil.  oi 
t   o«loU,d**.gDoiolh«i>aa«oflb«ind>viaualot  ODUIrlowhom  lb*  idootiiyiog  sumboi  bolvogi. 


U.S.  Triitury  Dipartmlnt,  Inlfrnil  Rt««nuo  Sarvica 


6021 


Lilly  Exhibit  No.  16 
Ted  Van  Dyk  Associates,  Inc.  122^  seventeenth  street,  n.w. 

WASHINGTON,  D.  C.    20036 
(20Z>    763-3337 


Avigust  27,   1970 

Mr.  Bob  Lilly 

Associated  Milk  Producers  Inc. 

GPM  Building 

San  Antonio,  Texas  78216 

Dear  Bob: 

Per  our  discussion  earlier  today,  please  see  the 
attached  invoice  for  processing.   See  you  in 
Washington  on  the  10th,  or  thereabouts. 

With  best  wishes. 

Sincerely, 


ed  Van  Dyk 


'^■^P'l'for,. 


6022 


Ted  Van  Dyk  Associates,  Inc. 


1224   SEVENTEENTH    STREET,  N.W. 
WASHINGTON,  O.  C.    ZOOSe 

(ZOZ)   7a3-3337     . 


August  28,   1970 


TO:       Associated  Milk  Producers 
GPM  Building 
San  Antonio,  Texas  78216 


Retainer,  October-December  1970      %   6,250.00 

Direct  Expense,  July-August,  1970     12,805.72 

Total  $19,055.72 


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6024 


Lilly  Exhibit  No.  17 


4/17/70 


I 


Called  Milt  Semer,  Washington,  D.  C.  Ullb/lO.      Milt  Semer  discussed 
the  Muskie  Election  Conanittee  which  is  the  official  name  of  the  fund 
raising  machinery  to  get  Muskie  re-elected  as  Senator  from  the  State  of 
Maine. 

Semer  stated  that  Ted  Van  Dyk  had  contacted  him  and  informed  Milt 
Semer  that  AMPI  was  ready  to  contribute  $  5,000  to  the  Muskie  campaign. 

Semer  was  quite  amazed  that  Ted  Van  Dyk  would  have  passed  this 
information  along  to  him.   I  informed  Semer  that  I  had  no  knowledge  of 
why  Ted  Van  Dyk  had  contacted  him  to  give  him  this  information. 

Semer  suggested  that  if  we  did  contribute  that  we  not  contribute 
this  amount  at  this  time,  but  hold  it  on  a  much  lower  scale,  and  he  would 
look  upon  AMPI  to  be  held  in  reserve.   I  assume  from  that  that  he  means 
contributing  in  the  neighborhood  of  $  1,500  to  $  2,000  on  the  first 
contribution  we  might  make  to  Semer. 

Semer  asked  me  to  check  out  Mr.  Martin  Hauan.   He  is  a  political 
PR  man,  1100  Sheraton  Hotel,  Oklahoma  City-telephone  no.  CE  6-0931. 
Semer  informed  me  that  Hauan  is  among  the  antl-Kerr  forces  in  the  state 
of  Oklahoma  and  his  current  assignment  according  to  the  information  he 
had  given  Semer  is  to  work  for  the  election  of  Howard  Edmundson,  ex- 
Congressman,  for  the  Governorship  of  the  state  of  Oklahoma.   Semer  stated 
he  is  a  smooth  dresser--rather  suave  sort  of  person,  very  candid--and  he 
did  not  know  him  and  wanted  me  to  check  him  out. 

Hauan  had  volunteered  to  head  up  Muskie  forces  in  the  state  of 
Oklahoma  if  Semer  saw  fit  for  him  to  do  this  in  a  low-key  manner,  but 
Semer  seems  to  have  some  doubt  about  him  as  he  questioned  him  on  several 
people  that  certainly  are  known  politically  in  Oklahoma  and  Hauan  was 
not  too  well  advised  on  them. 

A  TRUE  COPY 


6025 


Lilly  Exhibit  No.  18 
Ted  Van  Dyk  Associates,  Inc.  izza  seventeentm  street,  n. 

WASHINGTON,  O.  C.    20036 
UOZ>    763-3337 


September  14,    1970 

TO:  Bob  Lilly 

FROM:   Ted  Van  Dyk 

RE:     Whittemore  check 


Bob,  per  our  discussion,  please  tear-up  the  signed 
receipt  for  the  Whittemore  check.   The  check  itself 
has  been  destroyed  on  this  end. 

A  new  check  for  $1,000  to  "Maine  for  Muskie"  should 
be  drawn  to  replace  it.   Please  send  it  directly, 
with  new  receipt  for  signature,  to  Mr.  Robert  Nelson 
Room  1004,  1660  L  Street,  N.W. ,  Washington,  D.  C. 

Many  thanks. 


6026 


Lilly  Exhibit  No.  19 

Tcio  Van  Dyk  Associates,  Inc.  izo  scvcntccnth  &TnccT.  i^. 

WASHINGTON.  O.  C.     20030 


k 


(iOi)  7e3-J33T 


July  9,  1970 


Dear  Don: 

Harold  Nelson,  Dave  parr  and  their  colleagues  had  a  good 
jTieeting  yesterday  with  the  Senator.   Many  thanks.   Here  is 
the  follov.-up, 

1.  Please  see  attached  two  checks--$l ,666  each  for  the 
Kuskie  E  ection  Coranittee  and  for  the  Maine, for  Muskie 
Coirirnittee.   Additional  checks  of  $3>33^  each  will  be  sent 
to  you  v/ithin  the  next  fev;  days,  to  reach  a  total  of  55,OCv- 
for  each  corrimittee. 

2.  I^il  send  you  a  mernorand'ir;:,  and  list,  re  the  special 
Kilk  proi3raTi.   The  Senator  offered  to  help  on  this. 

3.  I'll  look  forward  "00  receiving  froi^i  you  a  11 50  of 
ca:"idldates  the  Senator  recon'.rnends  for  special  help  Lhr"  c 
fall.   Contributions  v.'ill  be  ~,ade  to  ther.,  on  the  basis 
■chat  the  contributions  come  at  the  Senator's  reco:n.-nenda">-iO"'.. 
I  suggest  that  the  list  be  relatively  short,  but  consist  of 
people  v.'ho  are  of  high  priority  to  you. 

h.        The  Senator  said  he  would  v.'elcome  the  input  of  several 
acaderr.ics  who  have  soine  help  to  offer  re  agricultural 
policy.   I'll  see  that  theiu  papers,  etc.  are  channeled 
through  you.   You  can  Judge  'their  usefulness. 

5.    Sniall  favor  departr.ent:   Dave  Parr  has  two  sons,  Travis 
and  Steve,  ages  18  and  17,  who  are  very  arixious  to  spend 
two  or  three  days  this  summer  carrying  bags,  driving  cars, 
etc.  in  the  Senator's  campaign  entourage  in  Maine.   They 
are  good-looking,  intelligent  boys.   They  would,  of  course, 
travel  and  work  at  their  own  expense.   Could  this  be 
arranged? 

I'll  stay  iri.  touch  on  all  of  this. 

V'ith  best  v;ishes. 

Sincerely, 


Ted  Van  Dyk 


Mr.  Don  Kicoll 
iCGO  L  Street,  K.W, 
Rm.  100^4 
.' .'.-""  ir.  ~ ".  en  D  C 


6027 


Specral  Political  A;;ricultur:il  Cominunity  Ldiication                               ■i^  •  loID 

SOS  I'OR  rUANU  UUILDING 
LOUISVILLE.  KiiNTUCKY  -40202 July    7^ jg    70 

aV 

voth;-;  Maine  for  Muskie  Coirjnittee,   '.vashir.Kton,    D.    C.  "^  1,666.00 

>:{z>^ii  ov— = "^ — ■ — - 

' /^V.ii      ■■  •    I  h  o-  (c^  !:^OiS  O  O  CIS DoLL-vRs 

SPACE  -  VIRGINIA  TRUST 


rSuSTiCOMPAMY,    LOUISVILLE.    KY.  CI\  ^ 


U..CA.^ 


i:oa30-OQ5a*:        oG-OB-o'ai-G-' 


DETACH   AND   RETAIN  TKIS   STATEMENT 
TTACHED  CHECK  t&  IN   PAVMvEWT  OF   tTEMS   DTSCRIBCO 
OW.  xr   NOT  COHf.£CT  PLEASE   NOTIFY   US   PROMPTLY. 


N9       1815 

Contribution  of  dairy  faxTr.ers  of  the  southeastern  states. 


2i    52 


S?eci£i  Po'iticai   Agricultural   Community  Education                                 i^  •              xC XI. 
508  PORTLAND  BUILDING 
LOUISVILLE.  KENTUCICY  40202  - .7uiy-  7_ .g  70 

•''  ■'-      -     -it?  ■;;"  ig    ■:"<.:•-■-■  O  O  CTS  „^,  .  ^  ^^  5iv66^^ 

r  -I 

Muskie  Electioa  Coamittee 
Washington,   D.   C. 

SPACE   -   KENTUCKY . TRUST 
_CJ;SV:lLE. TRUST  COMPANY,  LOUISVILLE.  KY. 


^y^o,..^P.j^y 


i:ofi  TO'"Oa  5  iw        oO'"Oa-o  2a-i,"'" 


N9      -12:1 


Contribution  of  dairy  f ansers  of  the  southeastern  states . 


6028 


Lilly  Exhibit  No.  20 


^X^HITE  a  Jacobsem 

IStt  IST*I  »TRe«T.N.>sr.  *                   \    •  Jacobsew  ©  LO>JG 

wr^jHlwCTON.  D.  C.20005  AU»TIW,"rtx/\3  7e767 

ao2-6so-aooo                          Vk  .                           "          "  siaA72ii3i 


PERSONAL. 

Mr.  David  Parr 
6423  Forblng  Road 
Little  Rock,  Arkansas 

Dear  Dave: 

At  your  suggestion,  here  is  a  summary  of  our  telephone  conversation 
of  &  few  minutes  ago. 

1.  I  am  working  with  gob  Lilly  to  reshape  the  paper  work  originating 
from  sources  such  as  SPACE.    I  understand  you  agree  that,  although  the 
figures  are  mathematicaU}'  precise,  they  raise  questions  of  logic  and  credi- 
bility we  may  find  difficult  to  ansv.'er. 

2.  It  is  vital  that  the  relationship  between  AMPI  and  the  Senator's 
Campaign  become  highly  personalized,  with  a  mintmtim  of  intermediaries 
and  brokerage  until  it  is  firmly  established  en  a  first-name  basis.    1  suggest 
we  a\'Did  fragmenting  or^bureaucratizing  your  inputs,  whether  they  be  finan- 
cial, academic,   cr  your  special  brand  '--!  political  savvy.    At  the  moment, 
■we  have  the  largest  supply  of  what  v/e  need  the  least,  namely,  the  academic, 
particularly  when  it  is  unfillered.    Moreover,  the  intellectual  contribution 
you  can  make  should  arise  cut  of,  rather  than  precede,  a  private  session  at 
hlB  cottage  in  Maine  or  his  home  in  Maryland.     I  have  been  planning  on  this 
since  we  first  discussed  this  approach  across  the  street  that  night  of  the 
Republican  Congressicnal  Dinner.    I  hope  that  this  format  will  make  sense 
to  you  and  that  you  wQl  also  find  it  feasible  to  make  it  work  beyond  milk, 
covering  the  entire  agropclitlcal  scene. 

3.  The  summer  seminar  for  your  boys  in  Maine  is  in  the  works. 

Sincerely  yoiurs. 


MUton  P.  Semer 
Mr.  Harold  S.  Nelson  RECEIVED  JUL  2  0  t370 

Jake  Jacobsen,  Esq. 


MiUTON  p.  Semer    '■  Lee  C. "White  Jake  Jacobsen  Caviw  >X'.  O  Briej-: 


6029 


Lilly  Exhibit  No.  21 


ATTORNEY  AT  LAW 

3309   FIRST  IMATIONAI..BUII.DING 

OKl_AHOMA  CITY.  OKLAHOMA  73103 


40S/23e-B99t 


,rt3ai303i 


30-337   O  -  74  -  12 


6030 


MUSKIE' ELECTION  COMMITTEE 
1156  15th  stheet,  n.  w.,  suttb  ^2 

V,-ASHrNGTON,  D.  c.  20005 


Milton  P.  Semer,  Treasurer 


August  3,    1970 


Stuart  H.  Russell,   Esq. 
23.09  First  National  Building 
Oklahoma  City,   Oklahoma    73102 

Dear  Mr.  Russell: 

.-.The  contributions  of  $1,  750.00  to  Maine  for 
Muskie  and  $1,650.00  to  the  Miiskie  Election  Commiittee 
are  a  big  help  in  assuring  Senator. MuSkie's-re-election 
this  year  to  the  United  States  Senate  from  the  State  of 
Maine. 


Thank  you  very  much. 


Sincerely, 


Milton  P.  -Senaer 


MPS/pym 


6031 


MUSKIE  ELECTION  COMNnTTEE 
1156  15th  stsbkt,  n,  \v,,  sunu  302 

WASHINGTON,  D.  C.  20005 


Milton  P.  Semer,  Treasurer 


December  1,    1970 


Stuart  H.  Russell,   Esq. 
2309  First  National  Building 
Oklahoma  City,  Oklahoma    73102 

Dear  Mr.  Russell: 

Thank  you  for  your  generous  contribution  of 

$5,000.00  to  the  Muskie  Election  Committee.     We  are 

truly  grateful  for  your  support. 

Sincerely, .  h 


Jlu/^lf-^^^ 


Milton  P.   Semer 


MPS/pym 


6032 


Sivavi  j-|.    Russell 

ATTORNEY  AT  LAW 
2309   FIRST  NATIONAU  JSUfLDING 

OKLAHOMA  OiT^.'.  OKLAHOMA  V3102 


8^8? 

FoJi   yoan.  X.nloKmatA.on 
and  AdccAd, 

SHR 


6033 


EDMUND  S.  MUSKIE 


V 


:K 


/ 


aiCixHcb  ^Ulcs  ^CIT0£C 


WASHINGTOr4.  D.C 


Mr-  Harold  S.  Nelson 
Associated  Milk  Producers,  Inc. 
1011  N.W.  Jlilitaxy  Highway 
San  Antonio,  Texas   78213 

Deal   Harold: 

Milton  Semer  has  given  me  a  summary 
of  the  generous  contributions  you  have  in- 
spired among  your  colleagues  and  friends. 
1  hope  you  will  convey  my  thanks  and  best 
wishes  to  Dave  Parr  and  Bob  Lilly  for  their 
continuing  support. 


_rf      U**-*^ — >— <^    ^ 


Edmund  S.  Muskie 


RECEIVED  AUG  2  7  1370 


6034 


STUART   H.    RUSSELL 

ATTOBNEY  AT   LAW 
1W9   FIWT  NATIONAI  BUriDING 

OKiAHOMA  ary,  oioahoma  73102 


CEnnol  J-7iJ9 


MooenbeA.  24,    1970 


Ain  MAIL 


Wa^inc\.ton,    V.C.    10  0 OS 

Ge.nt£.zmzni 

At  the.  Kzouzit   0^   Hk.    806    Lx.lZif,    of 
AiAociate.d  M^£h    Pfioduczfii ,    inc.    xr.   San   KntorJ^o , 
1  txat, ,    zncZoie-d  -ke.A.zi.oZth   iiou  m^iZt    {:,A.nd  ny   chzak 
•  255,    paajabtz   to    thz   MuA.'i^e    EZzctA-on    Comm/.ttzz 
in  tkz  piiu.nci.pai  iam   0^    ^S ,000.00 . 


Vtzaiz    contact  me   ti    you.   kavz   atiij 


qaZit'Lom , 


V0U.K&    vzMj  tfimtij 


SHRijk 
EncioiufLZ 


Sob    Lillii 


STUAnr   H,  nUSSELL 


^ 


rp^ 


n 


6035 


July   23,    1970 


MX.  Ted  Van  Dyk 
in    Van  Dyk  Associates,  Inc 


1224  Seventeenth  Street  N.  W. 
Washington,  D.  C.   20036 

Dear  Ted: 


Enclosed   are   two  checks    tn   the   amounts   of   $    1,750   and   $    1,650 
^^— ^        r.ads  out  to  Ilains   for  Muskie  and  iluskie  Election  Cainraittes 
respectively. 


These   two  checks   along  with   the   checks"  from  Dairyraenj    Inc.    and 
2-Iid-A>T>erica  make  a  total    slightly   in   excess   of   $    10,000. 

Sincerely, 

ASSOCIATED  MIU<  PRODUCERS,  INC. 


Bob  A.  Lilly 

Assistant  to  the  General  Manager 

BALikb 

Enclosures — checks  #  1002  &  0389 


6036 


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I6«S-9il3 


'    6037 

Sluart   M-    Rutceli 

ATTOHIMETir  AT  t_AW 
OKLAHOMA  ClTr.  OKL-flJHOMA  73103. 

July  24  70 

ASSOCIATED  MILK  PRODUCERS,  INC. 


ATTEMTION: 

Mr.  Bod  Isham 

Box  32287 

San  Antonio, 

Texas  78216 

t  pnorrssioNAL  SeitviccSi 


TO  Legal  Services  Rendered  in  Purchase  of  Wilsey- 

Bennett  and  Pure  Hilk  Producers  Coop  of  Winsted, 

Minnesota. $5,100.00 


1 


/'V    ■  .A-'' 


6038 


/(?  G  h.b  (^     — 


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6039 


Stuart  H.  Kussell 


ATTORNEY  AT  LAW 

2309     FIRST     NATIONAL     BUILDING 
OKLAHOMA     CITY.     OKLAHOMA     73102 


403/2363991 


January    13,     1971 


H\.    Bob    Lilly 

Kiiioclatzd  tUlk    FKoduce.A6 ,    Inc. 

Box  32287 

San  Anionic,    Te.xcu>    7S116 

VzaA.   Bob: 

Attachzd  li,   a  IzttzA.  which   T   Azte.lve.d 
^A.om  StnatOK  Uu^kle.   conaz^nlng   a  A.zcznt   coni.AU.ba~ 
tlon. 

ThlJ)    li   6ome.thlng   that   I    thoaght   you 
would  vjant  In   youK   ille.6 .      It  was   appafizntly  6znt 
to   San   Antonio   and  the.n    ioKwaA.de.d  to   me  anopznzd. 


'tfiuly   youKi^^ 
lEt± 


SHU'.jh 
Attachmtnt 


604q,u; 


m. 


r-^^ 


Sex.\tor  Edmund  S.  Muskie 

\vASHLNGTON,  D.  C.  20510 

December  22,  1970 


S-tuart  H.  Russell,  Esq. 

c/o  Harold  Nelson  "• 

1011  N."  W.  Military  Highway 

San  Antonio,  Texas   78213 

Dear  Mr.  Russell: 

Before  the  year  ends,  I  want  to  express  to 
you  again  my  very  warm  thanks  and  appreciation 
for  all  your  help  and  encouragement  to  me  in  the 
Eonths  that  have  passed. 

I  need  not  tell  you  of  the  many  great  prob- 
lems that  face  and  divide  our  country  in  this 
coming  year,  nor  how  vital  it  is  that  we^ — all  of 
us  together — find  a  way  to  restore  the  faith, 
the  confidence,  the  vigor,  that  are  the  great 
strength! and  inspiration  of  America. 

To  succeed,  1971  must  be  a  time  of  great  de- 
cision backed  by  positive  action  that  will  move 
us  irrevCTcably  forward  in  the  direction  of  our 
great  hopes.   1  am  looking  to  you  for  the  wise 
counsel  and  guidance  I  need  to  assist  me  in  form- 
ulating policies  and  positions  that  will  help  us 
all  to  achieve  this  goal. 

So  again,  my  thanks  to  you  for  your  confi- 
dence in  me  this  past  year.   And  with  it  my  wish 
for  a  New  Year  of  great  joy,  of  added  accomplish- 
ment, and  of  deepening  friendship  between'us. 

S3.ncer ely  . 


6041 
Lilly  Exhibit  No.  22 

attorney  at  l^^vv 

2309   FIRST  NATIONAL.  BUILDING 

OKLAHOMA  CITY.  OKl.J\HOMA  73103 


■40S/236-SS9I 


A 


J^CCS" 


jCZiJ  .^i^^->y^  4^^^^-^^  ^u^  ^Ji^^^i>te 


J.-  »■«*».'""  i^-^Sl, 


6042 


Lilly  Exhibit  No.  23 


ejf  i  ©LIBERTY 

1/   „^';  NATIONAU  BANK  &  TRUST  COMR^^iY 

'■''^■f^    j"'  OF  OKUAHOM  \  C1T^ 


_CiL£^ 


■      '  S  5,000. 00 


FIVE    THOUSAJSTD   AND   HO/IOQ- 


""""°'' t..s«-ov,.„vt  STUART  K.  RUSSELL.  SPECIAL 


i:io30'"00  i^i:     wios  aai,   3"" 


.■•0000  500000.'" 


Ajo    '    .-  T  /    .     dl! 


^     (L^.:L:-J~       ^^ 


I  ^  ■?   i 


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r     \ 


6043 


Lilly  Exhibit  No.  24 


aUBERTY 


7       ^^SK 


r  -r"^ ^  tf.ooo.oo 


■>fr^£<:..i..^H->..i.; 


STL'ART  H.  'Rl-SSELL.  SPECIAL 


r\   ^.--^J 


^ 


'■^-^^ 


rioao'-oo !.s>:     ""ioa  aai,   3n* 


,'•00001,00000/ 


vC  —  T- 


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J/ 


6044 


Lilly  Exhibit  No.  25 


-  s  -  = 


•-^^^THE  ^ZZ?£>^-;NAT10IVAL  BANK    -  a 


"^  1125 


execunvejrn 


clubJ 


:A'(.3'jia^  ;?r.    /97g 


Bob    LlZlu 


%  TO .aoo:oa 


'■''Tc}l'THCUSA:4V's.nd  hla/lOO"** 


}            1     ■    ■         -          -    -                    ! 

il   -  -     1                                 /.-.-I  ~,             1 

i| 

„'  '••'U               1 

11 

--VI           1 

STUART  H.  RUSSELL-.- 


i:'.0  3D"'D0iSi 


l?3     ZIS     e=i 


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^  /ooo iODOoaa/ 


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6045 


Lilly  Exhibit  No.  26 

12/18/69  $5000  (cash)  from  J.  Long  -  deposited  CNB 

$5000  from  Joe  Long  paid  on  $100,000  note 

12/23/69  $500  (cash)  deposited  CNB 

12/29/69  $5000  (check)  fromS.  Russell  -  deposited  CNB 

check  made  out  to  Bob  Lilly 

12/29/69  $5000  (check)  from  Jim  Jones  -  deposited  CNB 

check  made  out  to  Bob  Lilly 

12/30/59  $3000  (cash)  from  Cliff  Carter  -  deposited  CNB 

12/31/69  $10,000  (check)  from  Ted  Van  Dyk  -  deposited  CNB 

check  made  out  to  Bob  Lilly 

1/2/70  $1000  (cash)  from  F.  Masters-deposited  CNB 

1/20/70  $5000  (check)  from  S.  Russell-deposited  CNB 

check  made  out  to  Bob  Lilly 

1/27/70  $5000  (cash)  DeViere  Pierson-isd  note  #11169  CNB-2/2/70 

1/30/70  $5000  (cash)  from  an  unidentified  source  -  Pd  note  11169    2/2/70 

2/2/70  $5000  (cash)  from  J.  Long  -  pd  note  11169  -  2/2/70 

$15,000  paid  to  CNB  on  $100,000  note 

2/1 1/70  $28,231.77  paid  CNB  on  $100,000  note 

4/17/70  paid  CNB  $4,264.46  -  note  11169 

5/4/70  $5000  (check)  from  J.  Jones  -  deposited  CNB 

check  made  out  to  Bob  Lilly 

5/5/70  Borrowed  $10,000  from  CNB-ccntributed  to  HHH.  Note  12639 

B.  Lilly  check  #105 

6/11/70  $5000  (check)  from  Joe  Long -deposited  to  1st  National  Bank,  Evant,  Texas 

Check  on  Evant  Bank  issued  to  CNB 

6/11/70  To  HHH  -  $1450  check  from  B  Lilly  (#106) 


6/15/70  $2500  from  Carter  ($1500)  and  Maguire  ($1000)  transaction  made  in 

Kerrville  between  Carter  and  Lilly 

6/15/70  pd.  CNB  $7,503.77  on  $100,000  note  by  check  #108 


30-337   O  -  74  -  13 


6046 


.(2)  - 

6/30/70 
7/16/70 

8/6/70 


Paid  on  $10,000  note  at  CNB  (check  #110)    $2000  prin.  and  129.17  int. 


$5000  (check)  S.  Russell-deposit  CNB 
check  made  out  to  B.  Lilly 


$10,000  (cash)  from  J.  Long  paid  on  notes 

note  #13229  -  4000.00  cash  and  $4000  check  #113,   103,33  int. 

note  #13089  -  5488.50  princ.  and  274.36  int.;  total  5762.86 


8/24/70  $500  (cash)  from  Carter  and  $2500  (cashj)  from  Maguire 

8/27/70  paid  Isham  $13,800  by  check  on  CNB  to  clear  accounts  receivable -AMPI 

borrowed  $13,800  from  Ken  Odil,  CNB 


8/31/70  cashed  $10,000  check  from  S.  Russell  to  be  delivered  to  Atlanta  for 

Howard  Bo  Calloway  to  go  to  Bently  Gov.  race.    Contacts  at  Atlanta 
airport.    Lamar  Sizemore    or  Terry  McKenna,  tele:  404/521-2268- 
Transaction  took  place  on  9/2/70  in  Atlanta  airport. 


9/9/70  pd  CNB  $6161.38  on  $100,000  note  (#119) 


9/17/70  pdCNB  $15,000  on  $100,000  note  (check  #118) 

9/22/70  pd  CNB  $4000  on  $100,000  note  (Check  #120) 

9/22/70  Collected  $4000  Frank  Masters  and  pd  CNB 

9/24/70  $2500  (cash)  from  C.  Carter  -  deposited  CNB 


9/30/70  $5000  (cash)  from  Maguire  in  D.C. 


6047 

(3) 

10/2/70  $1000  (cash)  fromF.  Masters 

10/12/70  borrowed  $12,500  from  CNB    #14473  (cash) 

10/13/70  $12,500  delivered  to  J.  Chestnut  for  HHH 


10/22/70  borrowed  $5000  (note  14584)  CNB.  delivered  $5000  (under  Sec.  of  Agri. 

Phil  Campbell)  for  Pelcher -Fulton  Public  Utilities  Comm,  candidate  (R) 
Atlanta-  traveling  with  H.  Nelson 
pd  12/18/70  (check  #127)  5000,00  prlnc.  and  60.42  int. 


10/29/70  $5000  from  S.  Russell  -  deposited  in  CNB 

11/12/70  $5000  from  S.  Russell  -  deposited  CNB 


11/16/70  paid  CNB  4350.12  princ.  and  40.27  int. ,  or  4390.39  on  last  of 

$100,000  note  by  check  #125 

11/18/70  delivered  $1200  cash  for  J.  Glenn  Beall,  newly  elected  Senator,  Maryland 

thru  Marion  Harrison    (check  #124) 


11/23/70  paid  $143.97  to  Futura  Press  for  Bill  Heatly 

(check  #12  6) 


12/10/70  paid  CNB  $5000  princ.  and  161.46  int.  on  $12,500    debit  memo    note  14473 

12/16/70  Dep.  5000.  Stu  Russell  in  CNB 

12/18/70  Pd  CNB  $5000  plus  52.50  int.   (check  #127)  pd  note  14584 

1/19/71  Dep.   7500.00  from  S.  Russell  in  CNB 

1/26/71  7500  princ.  plus  68.54  int.  on  note  14473  (check  #n 2 8) 

2/7/71  Pd  CNB  $7500  plus  68.54  int.  on  note  #15243  (ck  #128)  bal.  on  12,500  note 


6048 


(4) 


3/12/71  $5000  dep.  CNB  S.  Russell 


4/28/71  Jake  Jacobsen  called  me  requesting  $10,000  cash  for  John  Connally 

be  delivered  to  Jacobsen  for  placing  in  Connally' s  safe  deposit  box 
at  CNB,  Austin, 


5/3/71  I  contacted  Stu  Russell,  Okla .  City,  and  he  advised  me  he  would  make 

cash  available  to  me  in  amount  of  $10,000  if  I  requested  it,  but  that  it  was 
expensive  to  AMPI  due  to  income  tax.    I  phoned  him  on  May  1  and  met 
with  him  in  person  on  morning  of  May  3  in  San  Antonio  office  on  possible 
ways  to  get  needed  money  without  it  being  so  costly  {set  up  dummy 
procedure  acct,  set  up  repair  acct,  etc?)  money  was  not  obtained  thru 
Stu  and  1  did  not  re-contact  him  after  May  3  (I  borrowed  money) 


5/3/71  1  contacted  HSN  as  to  how  to  get  money  thru  attorneys  or  by  borrowing. 

He  advised  me  he  and  D.  Parr  would  meet  in  San  Antonio  on  May  3  in  p. 
and  decide. 


5/4/71  HSN  advised  me  to  borrow  $10,000  (note  #17266)  in  my  name  at  CNB 

Austin,  for  J.  Connally.  1  borrowed  money  and  delivered  it  in  cash  to 
J.  Jacobsen  who  in  turn  stated  he  would  put  it  in  Connally's  cash  box 
at  CNB.    HSN  did  not  advise  me  how  to  recover  money. 


6/1/71  $1000  -  S.  Russell  to  Hal  -  deposit  CNB  (check) 


7/1/71  paid  $2000  to  CNB  on  $10,000  (note  #18196)  note  for  Connally 

check  #136  -  1891.67  princ.  ,   108.33  int. 


7/1/71  $1000  S.  Russell  to  BAL  -  deposit  CNB  (Check) 


7/29/71  $1000  dep.  CNB  -  S.  Russell 


8/17/71  HSN  instructed  me  in  the  presence  of  Bob  Isham  to  get  $5000  cash  to 

Dave  Parr  for  Wilbur  Mills -to  deliver  it  to  Parr  personally.    On  8/17/71 
I  borrowed  $10,000  -  CNB,  note  #18844,  from  CNB,  Austin,  for  Mills 
(personal  note-BAL)  and  delivered  $5000  of  it  same  day  to  Little  Rock 
Central  Flying  Service  to  D.  Parr's  secretary.  Norma  Kirk,  or  Unis  Hunt, the 
$5000  cash  in  an  envelope.    Company  Sabre  Liner,  Joe  Bell,  pilot,  on 
10/8/71  balance  of  proceeds  of  this  note  $5000  paid  on  same  note  #18844. 


6049 


AS]  ■ 

8/25/71 
8/30/71 


$4000  S.  Russell,  deposit  CNB  (check) 


pd  CNB  Austin  (note  #18196)  $5000  on  note 
Check  #137  -  4912.16  princ. ,  87,84  int. 


9/10/71 


Borrowed  $1000  from  CNB,  Austin,  from  Ken  Odil  -  delivered  to 
Larry  leaver  in  Insurance  Bldg. ,  Austin,  in  CNB  envelope 


9/16/71  $3000  S.  Russell  -  deposit  1st  Natl.  Bank,  Evant,  Texas  (check) 

on  the  same  day  I  wrote  $3000  check  on  Evant  Bank  to  CNB,  Austin, 
to  pay  on  notes 

9/27/71  deposit 


10/7/71 


$4000  Jane  Hart  (S.  Russell  secretary)  check  cashed  and  pd  on 
note  18844. 


paid  CNP: 

Note  18844:    10,000  princ,  93.89  int.;  10093.89  total 

Note  19056:    1203.67  princ,   14.95  int.;  1218.62  total 

4000.00  -  Russell  Check  (no  endorsement  necessary) 
check  #138=  2312.51 

5000.00  cash  (?) 
108.84    (?) 
10/13/71  J.  Jacobsen  called  me  while  stopped  in  Dallas  enroute  to  D.C.  on 

BN  #14.    He  had  called  San  Antonio  office  and  I  checked  into  office 
and  got  his  call  from  Annette  (Bain's  secretary).    Mrs.  Buckley 
answered  my  call  and  said  Jake  was  in  office  about  12:45  p.m.    He 
informed  me  he  was  going  to  D.C.  and  wanted  to  tell  Connally 
we  would  have  another  $5000  for  him  in  cash  in  Jake's  safety  deposit 
box  at  CNB,  Austin,  in  a  short  time.    I  okayed  this. 


a/10/71  Went  to  Austin-CNB,  cashed  $5000  check  from  S.  Russell  and  took 

cash  to  Jake  Jacobsen  at  his  office.    In  the  presence  of  Joe  Long,  I 
gave  the  money  to  Jake.    Jake  left  for  bank  at  11:45  a  to  put  in  his 
safety  box  at  CNB  to  hold  for  John  Connally. 


11/10/71 
11/10/71 


Austin  Airport  -  9:00  a.m.    ran  into  Jacobsen,  Tom  Townsend,  Dave  Parr 
(Joe  Long  came  in  later)    Dave  was  given  $5000  cash  by  Jake  for  Mills. 


Closed  out 


account  at  CNB       (#139  -  $1096.06) 


i 

lO.      i 

i 
i 

i 

\ 


I 


6050 


Lilly 

Exhibit 

No. 

27 

39S 

^ 

19 

^-^ 

TO ^^  _  J_i    _ 


rHis  che:c< 


BA1-AMC£ 


^-'^      .    *.*-*  . 


19  ^y 

NO.  399  ,=0.  ,.= 


TO- 


11  il-i-^:^ .  .<i:^  ^^  ^v 


::z^ 


THIS  CHECK  *■.  ^ 


^/z^^J-^        .1 9  :l 

NO.  4QQ  =  =  =■.. 


THIS  CHECK 


BALANCE      J- 


Editor's  note:  Check  stubs  numbered  398 
thru  A09  are  all  dated  April  26,  1971,  each 
for  $2,500,  and  "void"  written  across  face. 
Only  stubs  numbered  398  thru  400  shown. 


THURSDAY,  NOVEMBER   15,    1973 

U.S.  Senate, 
Select  Committee  on 
presroential  campaign  activities, 

Wa.9hington,  B.C. 

The  Select  Committee  met,  pursuant  to  notice,  at  5 :10  p.m.,  in  room 
1418,  Dirksen  Senate  Office  Buildins:. 

Present :  Senator  Weicker. 

Also  present :  Rufus  Edmisten,  deputy  chief  counsel ;  David  Dorsen, 
and  James  Hamilton,  assistant  cliief  counsels;  Alan  Weitz,  assistant 
majority  counsel;  Donald  Sanders,  deputy  minority  counsel;  Robert 
Silverstein,  assistant  minority  counsel. 

Senator  Weicker.  Do  j^ou  swear  the  evidence  you  will  ^ve  the  com- 
mittee shall  be  the  truth,  the  whole  truth,  and  nothing  but  the  truth, 
so  help  you  God  ? 

Mr.  Conn  ALLY.  I  do. 

Mr.  Wettz.  For  the  record,  would  you  please  state  your  full  name 
and  address,  please  ? 

TESTIMONY  OF  JOHN  B.  CONNALLY,  ACCOMPANIED  BY 
WILLIAM  E.  ECKHARDT,  COUNSEL 

Mr.  CoNNALLT.  My  name  is  John  B.  Connally,  2411  River  Oaks 
Boulevard.  Houston,  Tex. 

Mr.  Weitz.  I  see  you  are  accompanied  by  counsel.  Will  he  identify 
himself  ? 

Mr.  EcKHARDT.  William  R.  P^ckhardt.  I  am  a  partner  in  the  law  firm 
of  Vinson,  Elkins,  in  Houston,  and  I  am  here  accompanying  the  Gov- 
ernor as  his  attorney. 

Mr.  Weitz.  Governor,  I  would  like  to  direct  your  attention  to  a  pe- 
riod in  1969.  Were  you  ever  consulted  during,  let's  say,  the  first  half  of 
1969  in  connection  with  possible  contributions  by  either  Associated 
Milk  Producer's,  Inc.,  which  for  the  record  we  can  abbreviate  also  as 
AMPI,  or  its  political  arm,  TAPE  ? 

Mr.  Conn  ALLY.  In  what  connection  ? 

Mr.  Weitz.  Political  contributions  to  either  the  Republican  Party 
or  to  representatives  of  the  President,  either  for  his  reelection  or  for 
some  other  purpose  ? 

INIr.  CoNXALLY.  No;  the  only  conversation  that  I  can  recall  in  this 
time  frame  and  this  is  shortly  after  I  had  left  the  Governor's  office  and 
gone  to  Houston  to  practice  law,  I  Avas  informed,  I  would  not  call  it 
lieing  consulted,  and  that  is  a  question  of  semantics,  about — by  Jake 
Jacobsen  and  I  believe  Mr.  Harold  Nelson — about  their  plans  and  ask- 
ing about  their  i)lans  to  form  what  subsequently  perhaps  was  then  in 
existence.  TAPE,  or  a  political  arm  of  the  milk  producers,  similar,  as 
I  recall  the  conversations,  patterned  almost  precisely  after  the  COPE 

(6051) 


6052 

arm  of  or<ranized  labor.  And  I  was  asked  if  I  knew  of  any  objections 
or  any  real  reason  Avhy  it  should  not  be  done  leo^al  or  otherwise. 
Frankly,  they  didn't  do  it  as  a  legal  matter.  I  wasn't  employed.  This 
was  a  very  perfunctorj'-type  meeting  in  which  they  merely  informed 
me  about  what  they  were  going  to  do  in  a  general  way  in  terms  of 
structuring  their  future  activities. 

There  was  no  talk  of  any  specific  contributions  to  any  individuals 
or  parties  or  anything  else.  This  dealt,  as  a  generic  matter,  with  their 
mode  of  operations. 

Mr.  AVeitz.  Can  you  place  in  time  for  us  that  meeting  with  Mr. 
.Tacobsen  and  ]Mr.  Nelson  ? 

Mr.  CoxxALLY.  No ;  I  really  cannot.  I  don't  have  any  idea. 

Mr.  Weitz.  Where  did  it  take  place? 

]SIr.  Cox'XALLT.  I  am  not  even  sure  of  that. 

Mr.  Weitz.  At  that  time  you  were  back  at  3^our  law  firm  in  Houston  ? 

]Nrr.  CoxxALLY.  Yes,  but  I  am  reasonably  certain  it  was  not  there  for 
some  reason.  It  was  more  or  less  just  an  offliand  type  of  meeting  and  I 
would  think,  well,  I  just  don't  know.  I  just  cannot  place  it. 

Mr.  Weitz.  I  take  it  that  you  had  known  Mr.  Jacobsen  before  that 
time? 

Mr.  CoxNALLY.  I  have  known  Mr.  Jacobsen  for  25  years. 

Mr.  Weitz.  Has  he  ever  served  in  a  formal  capacity  in  an}'  of  your 
public  service  positions  ? 

]\Ir.  CoxxALLY.  I  wovild  say  unofficial.  He  has  at  times  been  an  offi- 
cer of  a  convention  or  something  of  that  type  but  his  political  activi- 
ties were  really  alined  with  former  Senator  Price  Daniel.  He  was  with 
Price  Daniel  when  he  was  attorney  general  of  Texas.  He  came  to 
Washington  to  serve  with  Senator  Price  Daniel  during  his  time  here. 
He  later  served  with  him  when  the  Senator  went  back  as  Governor  of 
Texas. 

So,  although  I  have  known  him  over  this  entire  period  of  time,  he 
has  not  ever  been  a  part  of  my  administration.  He  did  serve,  as  I  say, 
as  an  officer  of  some  of  our  conventions,  I  think,  beginning  in  1964. 

]Mr.  Weitz.  Had  he  ever  served,  for  example,  in  some  fund-raising 
capacity  for  you — any  of  your  previous  campaigns  ? 

Mr.  CoxxALLY.  No.  I  don't  recall  that  he  ever  had  any  official  posi- 
tion like  that. 

]Mr.  Weitz.  Is  this  the  first  time  that  he  had  ever  consulted  with  you 
or  discussed  matters  such  as  political  contributions  by  some  organiza- 
tion in  Texas? 

Mr.  CoNX'ALi.Y.  I  can't  recall  any  specific  prior  instance,  Mr.  Weitz. 
but  there  might  well  have  been. 

He  was  a  part  of  Governor  Daniel's  campaign  for  Governor.  He 
was  part  of  his  organization  in  the  race  for  attorney  general.  So  far  as 
I  know  he  cei'tainly  was  in  a  senatorial  capacity,  so  we  might  well  have 
discussed  it  although  at  tliat  point  he  and  I  were  not  discussing  poli- 
tical fnndi'aising  as  sucli,  and  you  will  recall  tliat  I  actually  ran  against 
Governor  Daniel  in  1962.  And  Mr.  Jacobsen  at  that  time  understand- 
ably supported  Senator  Daniel. 

Mr.  Weitz.  Was  tliat  the  first  time  that  you  met  Mr.  Nelson  at  this 
meeting  in  1969? 

Mr.  Coxx'ALLY.  No;  I  had  met  him  at  some  earlier  time.  I  Avould  say 
in  the  latter  years  of  the  1960's  and  I  can't  place  it  either  because  it  is 


6053 

just  one  of  those  passing  events.  But  I  recall  that  it  was  in  that  time 
frame  because  I  recall  very  well  that  President  Johnson  was  President. 
Cliff  Carter  introduced  me  to  Mr,  Harold  Nelson. 

Mr.  Weptz.  During  1969,  can  you  estimate  for  us  how  many  times 
you  may  have  either  met  with  or  talked  to  Mr.  J  acobsen  ? 

Mr.  CoNNALLY.  No,  I  don't  have  any  idea. 

Mr.  Weitz.  Would  it  be  as  many  as  10  times,  for  example  ? 

Mr.  CoNNALLY.  In  1969  it  could  have  been.  I  don't  know.  I  don't 
want  to  guess  at  the  number  of  times.  I  really  don't  know. 

But  I  have  talked  to  him — let  me  simply  say,  to  try  to  answer  your 
question  as  best  I  can — I  talked  to  him  over  the  years  on  many  occa- 
sions, but  to  try  to  specify  how  many  times  in  a  particular  year,  I  have 
no  idea. 

Mr.  Weitz.  Now  after  this  discussion,  this  brief  discussion  about 
the  formation  of  a  political  arm  for  AMPI,  did  you  have  an  occasion 
at  any  later  time  in  1969  to  discuss  either  with  Mr.  Nelson  or  Mr. 
Jacobsen  or  anyone  else  connected  with  AMPI  the  progress  of  that 
political  arm  or  any  contributions  that  it  might  have  made  ? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  Since  that  time  until  the  present  time  have  you  ever 
come  to  be  aware  of  any  contributions  in  cash  that  TAPE  made  in 
1969? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  Were  you  ever  consulted  either  in  1969  or  sometime  later 
by  Mr.  Jacobsen,  Nelson,  or  other  representatives  of  AMPI  with 
regards  to,  aside  from  contributions  to  AMPI  ways  in  which  AMPI 
might  have  access  to  or  approach  the  Nixon  administration  in  terms  of 
substantive  policies  ? 

Mr.  CoNNALLY.  No,  I  don't  recall  that  I  did. 

Mr.  Weitz.  They  never  asked  your  advice  as  to  who  to  contact  or 
what  the  best  approach  might  be  to  the  new  administration. 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  Are  you  aware  that  they  have  been  generally,  heavily 
identified  with  the  Democrats  in  the  previous  election  ? 

Mr.  CoNNALLY.  That  was  my  understanding  but  I  knew  nothing 
about  it.  That  was  just  a  general  understanding  that  I  had. 

Mr.  Weitz.  Governor,  is  there  anything  else  you  can  recall  with 
regard  to  that  meeting  in  1969  betw^een  you  and  Mr.  Jacobsen  and  Mr. 
Nelson  ? 

Mr.  CoNNALLY.  No,  nothing  of  any  import  because  I  don't  recall  that 
any  specifics  were  discussed  at  all  with  me.  As  I  recall,  the  thrust  of 
the  conversation  was  purely  the  plan  that  they  had  to  do  apparently 
what  they  have  done. 

Mr.  Weitz.  Now,  Mr.  Jacobsen  was  identified,  as  you  have  dis- 
cussed it,  as  a  lifelong  Democrat  up  until  that  time  ? 

Would  that  be  a  fair  characterization  ? 

Mr.  CoNNALLY.  I  would  say  he  probably  still  is. 

Mr.  Weitz.  That  is  right.  Do  you  think,  given  your  relation  with 
him  over  a  period  of  time,  that  he  might  have  asked  your  consultation 
with  regard  to  substantial  contributions  to  the  Republican  party? 

Mr.  CoNNALLY.  No,  he  did  not.  And  I  might  say  in  1969  I  was  a 
Democrat.  There  was  no  reason  why  you  should  be  consulting  me  about 
how  to  help  the  Republicans.  We  had  just  gone  through  a  campaign 
in  1968,  and  despite  some  of  the  rumors,  I  had  indeed  opposed  Presi- 


6054 

dent  Nixon.  I  had  supported  Vice  President  Humphrey  publicly  in 
every  way  that  I  could  and  I  might  say  we  carried  Texas  for  Mr. 
Humphrey,  one  of  the  iev>'  States  that  he  carried.  So  I  do  not  know 
why  anybody  would  approach  me  assuring  that  I  was  an  authority 
on  the  Republican  hierarchy. 

Senator  Weicker.  The  question  was  asked  by  the  counsel  as  to — I 
can't  repeat  the  exact  question  and  answer,  but  in  the  identification  of 
contributions  by  A]MPI  to  the  Democrats  in  the  previous  election. 

Is  that  the  substance  of  your  question  ? 

Mr.  Weitz.  Being  identified  as  supportive  of  the  Democrats. 

Senator  Weicker.  And,  Governor,  I  believe  you  indicated  that  you 
had  knowledge  of  that  or  you  did  not,  that  is  the  point. 

Mr.  CoNNALLY.  Senator,  I  said  I  only  liad  a  general  understanding 
that  they  had  been  heavy  contributors  to  the  Democrats  over  no  par- 
ticular period  of  time  but  in  the  congressional  as  well  as  Presidential 
campaigns,  but  I  had  no  specific  knowledge  about  it.  This  was  merely 
an  understanding  that  I  had. 

Senator  Weicker.  Did  you  have  any  political  or  professional  con- 
nection with  AMPI  ? 

Mr.  CoNNALLY.  No,  none  at  all. 

Mr.  Weitz.  Now,  turning  to  a  period  in  1971,  when  did  you  become 
Secretary  of  the  Treasury  ? 

Mr.  CoxNALLY.  FebniaW  11. 1971. 

Mr.  Weitz.Now,  did  there  come  a  time  in  March  of  1971  when  on 
one  or  more  occasions  you  met  with  representatives  of  AMPI  in  con- 
nection witli  tlie  milk  price-support  decision  that  was  then  in  dispute? 

Mr.  CoNXALLY.  Mr.  Weitz,  as  I  recall,  either  in  the  latter  part  of 
February  or  early  March  I  had  a  communication  with  Mr.  Jacobsen 
who  is  the  only  man  I  liave  talked  to.  He  was  in  the  private  practice 
of  law,  as  you  know,  representing  AMPI  prior  to  the  time,  and  I  don't 
i-emember  the  precise  date,  but  it  was  prior  to  the  time  that  the  admin- 
istration's decision  was  made  on  the  milk  price-support  program^  which 
I  believe  was  March  12. 

Mr.  Weitz.  That  would  be  the  first  decision  by  the  Secretary  of 
Agriculture  ? 

Mr.  CoNXALLY.  That  is  correct.  Mr.  Jacobsen  either  called  me  or 
came  by  to  see  me.  I  am  not  sure  whether  it  Avas  a  personal  visit  or  a 
telephone  call  but  in  effect  saying  to  me  that  the  milk  people  were  very 
distressed,  very  disturbed,  that  they  thought  that  Secretary  Hardin 
was  going  to  recommend  a  very  low  parity  support  price  or  a  very  low 
support  price  which  represented  about  80  percent  of  parity  and  that 
they  thought  this  was  a  very  great  mistake.  They  thought  it  was  unfair, 
unwarranted,  and  that  under  the  circumstances,  with  the  decreasing 
dairy  herds  and  the  rising  cost  of  the  dairymen,  that  indeed  they 
thought  a  higher  support  price  was  warranted  and  should  be  granted. 
They  expressed  the  hope  that  I  would  acquaint  myself  with  the  facts 
on  the  assumption  that  I  would  be  consulted  and  if,  indeed,  I  agreed 
with  their  position,  he  hoped  I  would  give  them  some  support.  That 
was  the  substance  of  the  conversation. 

Senator  Weicker.  "V^Hien  was  that  conversation  ? 

Mr.  CoxxALLY.  Senator.  I  do  not  recall  precisely.  As  I  say,  it  was  the 
eaily  pai+  of  March  or  the  very  last  part  of  February  because  it  was 
just  not  too  long  before  INIarch  12  because  they  obviously,  in  their  com- 


6055 

mimications  with  the  Department  of  Agriculture,  realized  that  they 
were  going  to  have  some  difficulty  in  persuading  the  Secretary  to  go 
as  high  in  setting  the  support  price  as  they  thought  the  facts  justified. 

Mr.  Weitz.  In  that  connection,  do  you  keep  or  did  you  keep  at  that 
time  any  records  of  either  meetings  or  a  calendar  of  some  sort  to  re- 
cord meetings  and  phone  calls? 

Mr.  CoNNALLT.  Yes,  I  did. 

Mr.  Weitz.  Have  you  brought  those  records  with  you  ? 

Mr.  CoNNALLY.  I  have  brought  those  that  you  asked  me  to  bring 
that  relate  to  this  subject  insofar  as  I  could  determine  what  they  are, 
yes. 

Mr.  EcKHARDT.  Let  me  state  that  we  have  here  all  of  the  records 
which  were  in  Governor  Connally's  possession  that  came  within  the 
category  mentioned  in  the  subpena,  and  in  that  connection  we  have 
found  only  two  pages  that  we  thought  might  possibly  apply  and  we 
brought  those  two  pages  out  of  his  records.  And,  of  course,  there  are 
other  records  here  in  other  categories  and  at  this  time  I  would  be  happy 
to  make  these  available. 

Mr.  Weitz.  Would  counsel  provide  them  ?  Perhaps  we  could  identify 
them  and  enter  them  as  exhibits. 

Mr.  EcKHARDT.  Do  you  want  only  the  ones  that  have  to  do  with  the 
question  you  asked  or  do  you  want  all  of  the  records  that  we  have  pro- 
duced here  under  the  subpena  ?  Which  are  you  asking  for  ? 

Mr.  Weitz.  It  would  be  appropriate  to  perhaps  identify  and  enter 
as  exhibits  the  documents  whicli  you  believe  to  be  relevant  and  enter 
those  into  the  record  and  the  remaining  documents,  if  you  will  turn 
them  over  to  the  committee,  then  we  cari  review  them.  And  if  we  can 
find  nothing  in  them  that  we  will  want  to  keep  in  the  record,  then  we 
will  return  them  to  you. 

Mr.  EcKiiARDT.  If  I  could  correct  that  statement.  I  have  no  knowl- 
edge as  to  whether  or  not  these  documents  are  relevant.  We  tliought 
that  they  were  the  only  ones  that  could  come  within  the  scope  of  the 
subpena  and  for  that  reason  they  are  produced.  You  will  have  to  deter- 
mine the  relevancy  of  them  for  yourself. 

Mr.  Weitz.  All  right. 

For  identification  here  is  a  xeroxed  copy  of  a  record  of  phone  calls 
on  March  16,  1972.  Governor,  would  you  identify  this  as  to  whetlier 
this  is  a  record  of  your  phone  calls  for  that  period  ? 

Mr.  Eckhardt.  Counsel,  the  record  contains  other  information  in 
addition  to  phone  calls.  It  contains  a  list  of  callers,  for  example,  and 
other  information. 

Mr.  CoNNALLY.  All  of  my  appointments,  phone  calls,  and  other  in- 
formation. This  so  far  as  I  know  is  an  accurate  and  correct  copy  of  the 
visits  and  phone  calls  and  engagements  I  had  on  that  dav.  This  hap- 
pens to  be  March  16, 1972. 

Senator  Weicker.  Might  it  not  be  easier,  if  the  committee  is  going 
to  receive  these  documents,  to  identify  them  by  the  date  of  the  docu- 
ment rather  than  the  contents?  Is  each  one  of  these  dated  ? 
^  Mr.  Weitz.  Yes.  The  others,  it  only  says  Tuesday,  March  28.  It  is  a 
similar  page- 
Mr.  Eckhardt.  It  is  for  1972. 

Mr.  Connai>ly.  1971. 

Mr.  Eckhardt.  One  has  March  16,  1972,  which  has  a  date  on  it.  The 
other,  which  only  has  Tuesday,  March  23,  on  it,  is  1971. 


6056 

Senator  Weicker.  Well,  let's  identify  each  one.  then,  as  the  log  for 
this  particular  date  and  year. 

Mr.  Weitz.  All  ri<rht.  One  would  be  the  log  for  Tuesday,  March  23, 
1971,  and  the  second  for  Thursday.  March  16, 1972. 

[Whereu]X)n,  the  documents  referred  to  were  marked  Connally  ex- 
hibits Nos.  1  and  2  for  identification.*] 

INIr.  Weytz.  There  are  other  papere.  Perhaps  we  can  identify  them 
by  category  for  the  record  only. 

Senator  Weicker.  Are  the  papers  that  you  have.  Governor,  are  they 
xeroxes  of  the  ones  tliat  you  have  ?  Are  those  additional  ? 

Mr.  Connally.  No,  these  are  xeroxes.  They  are  copies. 

Mr.  EcKHARDT.  He  lias  the  original  and  counsel  has  the  xerox. 

Now,  we  also  have  a  folder  here  which  has  General  Accounting  Of- 
fice reports  on  the  tab  and  it  consists  of  some  reports  of  Democrats 
for  Nixon.  I  will  hand  those  to  you.  They  are  all  of  the  reports  filed 
with  the  GAO. 

And  the  next  folder  has  a  tab  on  it,  "Dair\^men,"  and  it  has  in  it 
some  correspondence  together  with  some  pamphlets  and  a  record  of, 
I  believe,  one  meeting. 

And  this  is  all  of  the  information,  all  of  the  records  that  come  within 
the  categories  asked  for  in  the  subpena  which  were  in  the  witness' 
possession. 

Mr.  Weitz.  Now,  to  your  knowledge,  these  are  all  the  documents 
in  your  possession,  either  actual  or  constructive,  that  come  within  the 
scope  of  the  subpena  ? 

Mr.  Connally.  So  far  as  we  can  identify  them  and  within — I  might 
further  say,  within  the  time  frame  that  we  had  to  work  we  believe 
these  are  all  of  them.  We  had,  what,  48  hours  to  look  for  them.  I  think 
was  about  all,  but  I  think  these  are  all. 

Mr.  Weitz.  In  the  event  that  you  on  further  search  find  other  docu- 
ments, would  you  provide  them  to  the  committee? 

Mr.  Connally.  We  would  be  delighted  to. 

Mr.  Weitz.  Now,  Governor,  you  just  mentioned  a  meeting  in  either 
late  February  or  early  March  of  1971,  either  a  meeting  or  a  phone 
call  with  Mr.  Jacobsen.  Now  I  notice  you  haA^e  not  provided  us  with 
a  log  for  that  day. 

Mr.  Connally.  Simply  because  I  cannot  identify.  I  have  no  way  of 
identifying  what  was  discussed  in  any  particular  phone  call  on  any 
particular  day.  That  was  the  only  reason.  I  don't  know,  I  am  just 
telling  you  what  T  do  know  from  memory  and  T  will  be  jrlad  to  give 
vou  the  logs  for  the  latter  part  of  February  and  March,  if  you  prefer, 
but  I  cannot  do  it  on  the  assumption  that  every  one  of  the  calls,  if 
any.  from  Mr.  Jacobsen  related  to  the  subject. 

Mr.  Weitz.  Is  there  more  than  one  call  ? 

Mr.  Connally.  I  do  not  know. 

Mr.  Weitz.  Well,  in  searching  for  them,  did  you  notice  more  than 
one  call  ? 

Mr.  Connally.  I  do  not  think  there  is. 

Mr.  Weitz.  Well,  if  there  is  onlv  one  call,  we  would  obviously  re- 
quest that  vou  provide  the  log  for  that  day.  If  there  is  more  than  one 
call  I  would  think  that  you  should  provide  the  logs  for  each  of  the 
days  on  which  Mr.  Jacobsen  appears  and  we  can  pursue  the  matter 


'.See  pp.  6092  and  6093. 


6057 

with  him  or  in  some  other  way  try  to  determine  the  relevant  phone 
calls. 

Mr.  EcKHARDT.  We  will  make  copies  of  each  log  that  has  Mr.  Jacob- 
sen's  name  anywhere  on  it  during  whatever  time  period  you  want  and 
promptly  furnish  it  to  the  committee.  If  you  would  tell  me  the  time 
period  that  you  have  in  mind  it  would  help  us. 

Mr.  Wettz.  Well,  I  think  we  may  expand  on  it  later.  At  this  point  I 
would  say  from  the  time,  perhaps,  when  you  are  reasonably  certain  the 
call  may  have  come  in  or,  say,  from  the  time  you  came  on  or  mid- 
February  through  March  of  1971,  at  least  to  begin  with. 

Now,  you  are  aware,  of  course,  that  the  statutory  authority  for  es- 
tablishing milk  price  supports  rests  with  the  Secretary  of  Agriculture  ? 

Mr.  CONNALLY.  Right. 

Mr.  Weitz.  Did  you  take  Mr.  Jacobsen's  request  as  a  request  that  if 
you  were  consulted  by  the  Secretary  of  Agriculture  you  would  transmit 
your  views  to  him  ? 

Mr.  CoNNALLY.  Yes. 

Mr.  Weitz.  Did  he  indicate  that  he  also  hoped  you  would  express 
your  views  to  anyone  else,  for  example,  in  the  "^AHiite  House  ? 

Mr.  CoNNALi,Y.  No,  he  obviously  did  not  try  to  specify  by  whom  I 
would  be  consulted  nor  with  whom  I  should  talk. 

Mr.  Weitz.  Did  he  mention  anyone  else  other  than  the  Secretary  of 
Agriculture  ? 

Mr.  Conn  ALLY.  No. 

Mr.  Weitz.  Did  he  mention  the  Secretary  of  Agriculture  at  all  ? 

Mr.  CoNNALLY.  He  did.  As  I  recall  the  conversation  he  expressed  the 
hope  that  T  would  be  consulted  by  the  Secretaiy  and,  if  I  was,  he  \sould 
hope  that  I  would  agree  with  their  position  and  so  state. 

Mr.  Weitz.  Can  you  recall  anything  else  about  the  conversation  ? 

Mr.  CoNNALLY,  No ;  I  think  that  was  about  the  substance  of  it  except 
my  response  was  that  I  did  not  know  to  what  extent  I  would  be  con- 
sulted but  that  I  most  certainly  would  familiarize  myself  with  it  and  if, 
indeed,  they  were  correct  that  he  was  thinking  in  terms  of  a  support 
price  at  80  ])ercent  of  parity,  I  thought  that  was  too  low.  I  did  not  need 
to  familiarize  myself  with  it,  I  was  already  familiar  with  it  to  that 
extent.  But  I  would  certainly  bring  myself  up  to  date. 

And  my  position  on  it,  INIr.  Weitz.  is  very  clear.  It  was  in  every  con- 
versation I  had.  It  still  is.  And  that  is  simply  that  in  that  time  frame 
in  1971,  even  though  I  had  just  come  aboard,  we  Avere  in  the  middle 
of  what  was  being  called  a  stagflation,  a  recession.  We  wore  involved 
in  a<lministering  a  budget  that  was  in  excess  of  $20  billion  in  deficit. 
Part  of  the  justification  foi'  the  full  employment  biidget  that  we  had 
was  that  we  were  trying  to  stinmlate  the  economy  to  get  economic 
expansion  to  create  the  jobs.  And  we  were  putting  out  that  kind  of 
money.  I  felt  then  that  80  percent  of  parity  w^as  an  unreasonably 
low  level  for  price  support  of  milk  and  made  no  bones  about  it  and 
I  simply  said,  and  in  subsequent  conversation,  that  the  farmer,  the 
dairy  farmer  was  probably  in  about  the  lowest  income  group  in  the 
country  and,  under  the  circumstances,  since  the  Johnson  administra- 
tion had  always  maintained  the  parity  on  milk  prices  at  about  89  per- 
cent, that  I  thought  it  was  totally  unrealistic  and  unjustified  for  us 
to  drop  it  to  81  percent. 

Mr.  Weitz.  Would  you  have  said  all  this  to  Mr.  Jacobsen,  a  long- 
time friend  in  Texas  ? 


6058 

Mr.  CoNNALLT.  Would  I  ? 

Mr,  Weitz.  AYould  you  liave  ? 

Mr.  CoNNALLY.  I  do  not  know  that  I  did  at  that  point  in  time 
but,  sure,  I  would  have. 

Mr.  Weitz.  I  see.  So  you  are  recounting  your  views  on  the  matter  as 
opposed  to  exactly  what  you  may  have  told  Mr.  Jacobsen? 

Mr.  CoNXALLY.  Yes,  I  am  just  recounting  mj^  views  on  it,  not  what 
I  told  him. 

Mr.  Weitz.  Did  he  discuss  how  their  AMPI's  political  arm  had  pro- 
gressed since  they  last  talked  to  you  ? 

Mr.  Con  X ALLY.  No,  he  did  not. 

Mr.  Weitz.  He  had  not  talked  with  you  about  it,  I  take  it,  in  the 
interim  between  early  1969  and  early  1971  ? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  Now  you  have  mentioned  other  conversations.  Did  there 
come  a  time  when  you  spoke  to  Mr,  Jacobsen  again  about  tliis  matter? 

Mr.  Conn  ALLY.  Yes. 

Mr.  Weitz.  Could  you  tell  us  about  this  ? 

Mr.  CoNX'ALLY.  This  was  after  the  order  was  issued  on  INIarch  12 
and  it  was  a  few  days  thereafter  and  maybe  it  was  the  day  of  the  23d. 
I  see  his  name  is  on  here  again.  I  am  guessing  about  the  subject  mat- 
ter, but  the  reason  I  assume  that  and  the  i-eason  I  guess  that  is  be- 
cause we  did  indeed  have  a  meeting  that  day  as  reflected  on  mj^  calen- 
dar at  the  White  House  on  milk. 

Now,  in  the  subsequent  conversation  Mr.  Jacobsen  said  to  me  that  he 
wanted  me  to  know  that  when  the  order  came  out  on  March  12  that 
they  Avere  bitterly  disappointed,  that  they  thought  it  was  going  to 
create  chaos  in  the  milk  industry  where  they  were  already  losing  tre- 
mendous numbers  of  cattle  and  herd  and  a  great  many  of  them  going 
out  of  business  and  that  they  were  frankly  going  to  turn  to  Congress 
for  relief  and  they  had  done  so,  and  that  they  had  enormous  support 
and  that  they  frankly  were  going  to  push  for  their  85  or  90  percent  of 
parity.  And  he  told  me  then  the  relative  success  that  they  had  had  in 
the  intervening  few  days,  and  I  might  point  out  that  on  one  bill  in 
the  House  of  Representatives  pending  at  that  time  they  had  been  able 
to  secure  102  sponsors  for  00  percent  of  parity  and  in  the  Senate,  as  I 
recall,  they  had  about  33  Members  of  the  Senate  already  sponsoring  a 
bill  calling  for  85  percent  of  parity.  But  he  said  : 

I  want  you  to  know  this  is  going  on  because  we  are  not  trying  to  undercut  the 
administration,  we  are  not  trj-ing  to  create  problems  for  you.  but  we  do  not 
think  we  have  been  treated  fairly  and  we  don't  have  any  recourse  except  to 
proceed  to  try  to  get  congressional  relief.  We  think  beyond  any  question  we  are 
going  to  be  successful  and  we  just  want  you  to  know  this. 

That  was  the  essence  of  the  conversation.  I  said :  "Thank  you  very 
much.  I  don't  have  any  argument  with  what  you  are  doing  and  I 
understand  your  position  clearly." 

Mr.  Weitz.  Did  he  discuss  anything  else  with  you  at  that  time? 

Mr.  CoNNALLY.  No ;  I  do  not  recall  that  he  did. 

Mr.  Weitz.  He  did  not  mention  any  matters  concerning  political 
contributions  ? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  This  is,  to  the  best  of  your  recollection,  on  March  23? 
Mr.  CoN^NALLY.  Yes ;  and  again  I  am  guessing  because  I  do  have  a 
telephone  call  from  him  logged  here  so  I  guess  that  is  correct. 


6059 

Mr.  Weitz.  Do  you  recall  any  meetings  between  the  time  that  yon 
first  talked  to  Mr.  Jacobsen  on  the  phone  or  in  person  briefly  in  late 
February  or  early  March  and  this  conversation  on  the  23d  ? 

Was  there  some  other  conversation  that  you  may  have  had  with  him 
and/or  others  from  AMPI  in  connection  with  the  milk  price  support 
matter  ? 

Mr.  CoNNALLT.  No ;  I  do  not  recall  any. 

Mr.  Weitz.  Do  you  recall  a  meetino'  with  Mr.  Nelson  and  a  Dr. 
G  eorge  Mehren  during  that  time  ? 

Mr.  CoNNALLY.  No;  I  do  not. 

So  far  as  I  know  the  first  time  I  ever  met  Dr.  Mehren  was  almost  a 
year  later. 

Mr.  Weitz.  In  1972? 

Mr.  Conn  ALLY.  In  1972. 

Mr.  Weitz.  During  this  period  you  do  not  remember  a  meeting  in 
your  office  with  Mr.  Nelson.  Mr.  Jacobsen,  and  Dr.  Mehren  ? 

Mr.  CoNNALLY.  No ;  I  do  not. 

Mr.  Weitz.  If  they  were  to  recall  such  a  meeting,  would  you  just 
take  it  to  be  that  your  memoiy  was  faulty  on  that  point  ? 

Mr.  CoNNALLY.  I  could  be  but,  indeed,  if  I  had  a  meeting  in  my 
oificei  during  that  period  of  time  it  woidd  certainly  reflect  that  I  met 
with  them  and  we  did  go  through  the  logs  of  these  meetings  in  my 
office  as  well  as  the  telephone  calls,  and  if,  indeed,  I  had  seen  Dr. 
Mehren,  Nelson,  and  Jacobsen,  I  certainly  would  have  submitted  that 
because  that,  obviously,  would  have  been  the  subject  matter. 

Mr.  Weitz.  For  example,  if  Mr.  Jacobsen's  name  had  appeared, 
would  he  have  established  such  a  meeting  and  brought  the  otlier  gen- 
tleman with  him  which  would  not  have  been  on  the  log  ? 

Mr.  CoNNALLY.  No;  normally,  if  you  will  look,  nearly  all  of  tlie 
names  are  there  of  everj^body  that  came  in  tlie  office. 

Let's  take  the  date  of  March  16,  1972,  which  is  on  the  sheet  there. 
It  shows  3 :15  to  3 :50  I  met  with  Mr.  Jake  Jacobsen,  Dr.  George 
Mehren,  Harold  Nelson,  dash.  Dairy  Co-op. 

Mr.  Weitz.  Your  logs  do  not  establisli  any  other  meeting,  to  the 
best  of  your  knowledge  ? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  Now,  this  meeting,  or  this  call  I  should  say,  from  Mr. 
Jacobsen,  was  that  before  or  after  the  meeting  tliat  is  noted  on  the  log 
of  March  23  with  the  President's  office  on  milk  ? 

Mr.  Conn  ALLY.  I  have  no  way  of  knowing  that  because  we  did  not, 
except  in  rare  cases,  put  down  the  time  of  the  phone  call  but  I  would 
assmne  it  was  before  because  the  meeting  at  the  White  House  was  at 
4 :45,  which  was  running  fairly  late  in  the  afternoon.  So  I  would  as- 
smne that  it  was  before  the  meeting. 

Mr.  Weitz.  The  first  phone  call  listed  on  the  log  of  March  23  is 
from  the  President  at  10 :15  ? 

Mr.  Co>iNALLY.  Right. 

Mr.  Weitz.  Would  that  relate  in  an}'-  wa,j  to  this  matter  of  milk 
price  supports? 

Mr.  CoNNALLY.  I  would  not  think  so  but  I  cannot  say  with  certainty. 
Let  me  tell  you  why  I  do  not  think  so. 

If  you  will  look  down  under  calls  and  I  do  not  know  why  this  sheet 
was  ever  pi'epared  this  way,  but  anyway,  it  does  not  reflect  calls,  it 
reflects  meetings  from  8  in  the  morning  to  10 :05. 


6060 

There  was  a  meeting  at  the  White  House  with  Ecpiiblican  leader- 
ship, a  2-hoiir-and-5-miniite  meeting  at  the  White  House  with  the 
Republican  leadership.  Again  the  President  called  and  they  did  put 
a  tirne  on  that  call  at  10:15  so  obviously  I  just  returned  from  that 
meeting.  I  have  to  assume  that  his  call  had  something  to  do  with  the 
meeting  that  had  just  broken  up  and  not  relating  to  the  milk  matter. 

Mr.  Weitz.  Are  only  calls  that  are  actually  completed  listed  on  this. 
on  your  log  as  opposed  to  callers  whose  calls  are  not  completed  ? 

Mr.  CoNNALLY.  I  think  only  the  completed  calls  but  I  will  have 
to  verify  that.  I  cannot  say  it  with  certainty  but  I  think  that  must  be 
right. 

Mr.  Weitz.  Can  j^ou  tell  us  who  Gus  Mucher  is  who  appears  to  have 
received  a  call  from  you  and  he  resides  in  Austin  ? 

Mr.  CoNXALLY.  Yes ;  Gus  Mucher  was  a  former  speaker  of  the  house 
of  representatives  from  Brenham,  Tex. 

Mr.  Weitz.  Did  that  matter  relate  to  the  milk  price  support  deci- 
sion? 

Mr.  CoNNALLY.  No,  I  would  think  not.  No,  and  I  frankly  do  not 
know  why  I  called  him,  probably  to  give  him  my  condolences.  You 
will  recall  that  he  was  involved  in  another  time  period  but  he  was 
involved  in  at  a  subsequent  time  or  perhaps  during  this  period  of 
time  in  the  Sharpstown  problem.  I  do  not  know  why  I  called  him. 

Mr.  Weitz.  Now,  either  before  or  on  this  date  you  do  not  recall  a 
conversation  with  j^fr.  Jacobsen  in  which  the  question  of  new  monej- 
from  the  milk  people  was  raised  ? 

Mr.  COXNALLY.  No. 

Mr.  Weitz.  If  such  a  matter  had  been  discussed  that  certainly  would 
stick  in  your  mind,  I  take  it  ? 

Mr.  CoNNALLY.  Well,  I  would  not  know  what  they  meant  by  neAv 
money  because  I  did  not  laiow  anything  about  any  old  money. 

Mr.  Weitz.  Had  any  matters  in  connection  with  any  commitments 
by  the  dairy  industry  to  the  presidential  or  Republican  Party  ever 
been  discussed  with  you  ? 

Mr.  CoNNALLY.  Not  at  all ;  not  by  anyone. 

Mr.  Weitz.  Were  you  aware  of  any  such  commitments  ? 

Mr.  CoNNALX-Y.  I  was  not. 

Mr.  Weitz.  Are  you  aware  of  any  commitments  to  this  day  made 
sometime  in  1971  ? 

Mr.  Conn  ALLY.  Only  through  the  press,  and  I  read  in  the  paper 
where  there  was  a  letter  written  by  some  man  in  1970  talking  about  a 
$1  million  or  $2  million  contribution  but  I  was  totally  unaware  of  it 
until  I  read  it  in  the  newspaper. 

Mr.  Weitz.  And  you  never  expressed  an  opinion  on  or  before  this 
date  to  Mr.  Jacobsen,  as  to  additional  moneys  in  addition  to  some  prior 
commitments,  should  be  made  in  order  to  obtain  a  milk  price  support 
increase  support  from  the  administration  ? 

Mr.  CoNXALLY.  Absolutely  not. 

Mr.  Weitz.  I  take  it  you  did  not  attend  the  meeting  between  the 
President  and  the  dairy  farmers,  the  representatives  of  the  dairy  in- 
dusti-y  on  the  28d  ? 

Mr.  CoNNALLY.  On  the  23d  of  what  ? 

Mr.  Weitz.  The  2od  of  March — this  day  that  you  are  looking  at. 

Mr.  CoNNALLY.  No,  I  am  sure  that  I  did  not. 


6061 

Mr.  Weitz.  So,  the  first  meeting  that  you  had  with  the  President 
concerning  the  milk  price  support  level  would  have  been  the  meeting 
at  4:45? 

Mr.  CoNNALLY.  Right. 

Mr.  Weitz.  Can  you  recall — where  did  that  meeting  take  place? 

Mr.  CoNNALLY.  I  do  uot  remember ;  it  would  be  the  Cabinet  Room 
or  the  Roosevelt  Room,  I  would  imagine. 

Mr.  Weitz.  Can  you  recall  for  us  who  attended  that  meeting  ? 

Mr.  CoNNALLY.  There  were  quite  a  few,  and  as  best  I  can  recall, 
Secretary  Hardin  was  there,  Director  Shultz  was  there — he  was  then 
Director  of  the  Office  of  Management  and  Budget.  I  ibelieve  Dr.  Mc- 
Cracken  was  there,  perhaps  other  members  of  the  Council  of  Economic 
Advisers. 

Mr.  Weitz.  And  the  President,  of  course  ? 

Mr.  CoNNALLY.  The  President  was  there — there  were  two  or  three 
staff  people  who  were  there ;  I  was  there.  I  cannot  be  more  precise  than 
that. 

Mr,  Weitz.  Now,  before  this  time  had  yoa  discussed  with  either 
Secretary  Hardin,  Director  Shultz,  Dr.  McCracken,  or  anyone  else 
in  the  administration,  the  question  of  milk  price  supports? 

Mr.  CoNNAixY.  Oh,  I  think  beyond  any  question,  I  had.  Not  anj^ 
formal,  structured  meeting,  but  we  were  in  constant  meetings  during 
this  period  of  time  about  all  different  types  of  subjects.  I  was  appear- 
ing on  the  Hill  with  great  regularity ;  following  my  confirmation.  I 
was  particularly  in  communication  with  the  Council  of  Economic 
Advisers  and  Director  Shultz  about  all  types  of  administration  policy ; 
and  I  would  dare  say  the  subject  had  come  up — but  not  in  such  a  way 
that  I  remember  any  particular  meeting,  or  any  particular  comment 
that  was  made  by  anybody. 

Mr.  Weitz.  Do  you  remember,  for  example,  the  positions  taken  by 
the  gentlemen  ? 

Mr.  CoNNALLY.  Oh,  yes ;  I  remember  quite  well. 

Mr.  Weitz.  Let  us  take  it  one  at  a  time. 

Secretary  Hardin  ? 

Mr.  CoNNALLY.  Secretary  Hardin,  basically — now  you  are  talking 
about  the  time  frame  of  the  23d  ? 

Mr.  Weitz.  Let  us  say,  before  the  23d,  your  conversations  with  him. 

Mr.  CoNNALLY.  Secretary  Hardin  obviously  had  stated  his  jiosition 
and  it  had  prevailed — in  this  position — on  March  12.  He  basically  was 
recommending  a  support  level  at  81  percent  of  parity.  I  think  that  was 
concurred  in  by  Director  Shultz.  I  think,  beyond  any  question,  and 
perhaps  others— I  do  not  recall  the  others'  positions  with  a  degree 
of  certainty  that  I  would  want  to  try  to  speak  for.  Obviously  the  81 
percent  of  parity  did  not  reflect  my  view,  at  all,  but  my  views  were  not 
that  persuasive,  nor  that  important.  I  liad  stated  them  prior  to  the  12th 
and  subsequent  to  that  time  we  had  had — and  the  reason  I  think  we 
have  had  cursory  talks,  about  the  price-support  program,  because  we 
would  begin  to  get  feedback  from  the  Hill — that  a  great  deal  of  effort 
was  goins:  on.  on  the  Hill,  and  that  the  milk  people  were,  indeed,  active 
on  the  Hill.  That  all  of  our — in  my  own  case,  T  was  up  on  the  Hill,  as  T 
said  a  moment  ago,  a  great  deal  testifying  before  committees  in  the 
House  and  the  Senate,  and  I,  from  time  to  time,  was  talked  to  by 
people  on  both  sides  of  the  aisle  and  they  were  very  upset  about  it.  It 


k 


6062 

was  obvious  that  there  was  building  a  real  push  on  the  Hill  for  con- 
gressional action  to  overturn  the  price  support  level  of  81  percent 
of  parity. 

Mr.  Weitz.  Did  you  speak  to  anyone  in  the  White  House  before  this 
meeting  on  the  23d  to  express  your  views  ? 

Mr.  CoNNALLY.  Well,  I  would  say,  again  without  being  able  to  tell 
you  the  times  and  places  of  precise  details,  I  would  say  yes,  I  think 
I  had  mentioned  it  to  Secretary  Slniltz.  I  think  I  had  talked  to  Dr. 
McCracken  about  it. 

Mr.  Weitz.  Can  you  recall  anyone  else  you  might  have  spoken  to '? 

Mr.  CoNNALLY.  No ;  but  every  time  we  got  into  a  meeting,  tlie  sub- 
ject miglit  have  come  up,  there  might  have  been  o  people  there,  there 
might  have  been  10  people  there,  but  if  you  are  asking  me  about  any 
other  particular  individual  specifically  than  the  President,  I  have  no 
rememberance  of  talking  to  the  President  about  it. 

Mr.  Weitz,  Do  you  recall  talking  to  the  President  about  it? 

Mr.  CoNNALLY.  No ;  T  do  not. 

Mr.  Weitz.  Might  you  have  ? 

Mr,  CoNNAixY.  No;  I  did  before  the  12th,  but  I  do  not  recall  that  I 
did  after  the  12th,  I  frankly  thought  it  was  a  closed  issue  and  we  had 
made  a  mistake,  and  I  simply,  in  the  various  comments  that  I  made 
on  the  23d  and  what  comments  I  made  to  George  Shultz  and  others,  if 
indeed  I  made  any,  was  to  the  effect  that  I  thought  we  had  made  a  mis- 
take and  that  I  thought  the  Congress  was  going  to  act. 

Mr.  Weitz.  Now  before  the  12th,  you  mentioned  you  talked  to  the 
President  about  this.  Can  you  recall  when  that  took  place? 

Mr.  CoNNALLY.  No;  but  all  of  us — those  of  us  who  were  concerned 
with  economic  matters — our  opinion  had  been  asked  and  I  assume  that 
they  asked  advice  of  a  lot  of  people.  I  expressed  the  opinion  that  I 
had  previously  given  to  you,  that  I  thought  80  or  81  percent  was  too 
low.  I  thought  it  was  a  mistake  and  I  gave  all,  the  reasons  why  I 
thought  it  was  a  mistake. 

Mr.  AVeitz.  Did  you  ever  discuss  with  the  President,  before  the  first 
decision,  anything  concerning  the  political  activity  of  these  dairy 
co-ops  ? 

Mr.  CoNNALLY.  No;  political  activities  in  what  sense?  In  the  argu- 
ments, yes,  in  relation  to  their  influence  on  the  Hill — and  I  do  not 
use  that  in  a  crass  or  bad  way — but  they  obviously  wei-e  in  a  i)Osition 
to  talk  to  a  great  many  peojjje  on  the  Hill  and  api>arently  get  a  more 
reasonable  approach  in  answering  their  problem.  And  I  must  say  that 
I  think  the  Congress  was  right  when,  indeed,  yon  ^ot  102  signatures 
on  the  bill  in  the  House  asking  for  90  {)ei-cent  oiF  parity,  and  when  you 
got  Senators  like  Senator  Nelson  and  Allen,  Rayh,  Bentsen,  Burdick, 
Cook,  Cranston,  Eagleton,  P^astland,  Fulbright,  Gravel,  Harris,  Hart, 
Hartke,  Hollings,  Hughes.  Tnouye.  Long,  McCiee,  McGoyern,  Mon- 
dale,  Moss,  MusTvie,  Pi-oxmire,  Si)ai'kman,  Stevenson,  Symington,  and 
Tunnev.  all  on  one  bill,  calling  for  8.5  i)ercent  of  ])arity  ? 

Mr.  Weitz.  The  bill  never  passed,  did  it  ? 

Mr.  CoNNALLY.  No ;  but  the  reason  T  think  it  did  not  pass  was  because 
Secretary  Hardin  changed  his  mind  about  the  level  of  parity. 

Mr.  Weitz.  And  you  never  discussed  befoi-e  this  meetins:  on  the  23d, 
possible  political  contributions  by  these  groups,  with  the  President? 

Mr.  CoNNALLY.  I  never  discussed  political  contributions  by  this 
group  with  them,  or  with  him,  or  with  anybody  else. 


6063 

Mr.  Weitz.  Did  you  talk  to  him  about  the  possible  support  they 
might  give  him,  without  being  specific  about  it  ? 

Mr.  CoNNALLY.  I  do  not  recall  that  I  did. 

Mr.  Weitz.  Are  you  aware  that  he  had  had  a  brief  meeting  the 
previous  year  with  Mr.  Nelson  and  another  representative  of  AMPI  ? 

Mr.  CoNNALLY.  No;  I  was  not. 

Mr.  "Weitz.  Did  he  speak  to  you  in  terms  that  he  indicated  that  he 
was  familiar  with  this  particular  co-op,  or  its  leaders,  or  other  co-ops? 

Mr.  CONNALLY.  No, 

Mr.  Weitz.  Now,  at  the  meeting  on  the  23d,  could  you  tell  us  what 
views  were  the  same  views  that  you  have  heard  earlier,  were  they 
reexpressed  ? 

Mr.  CoNNAixY.  I  would  say  "modified."  And  again,  Mr.  Weitz,  let 
me  try  to  put  this  in  the  proper  perspective.  When  we  go  into  a  meet- 
ing with  the  President,  all  of  his  Cabinet  officers  and  advisors  tried  to 
analyze  a  problem  in  terms  of  tlie  options  and  tlie  alternatives  and 
the  pros  and  cons  of  every  position.  So,  there  was  no  question  of  going 
in  and  choosing  up  sides,  or  showing  of  hands,  or  anything  of  that 
kind.  Rather,  we  tried  to  analyze  the  problem  from  every  standpoint. 
I  think  it  is  fair  to  say  that  by  the  time  this  23d  meeting  came  about, 
that  everyone  in  that  room  was  aware  of  what  was  happening  on  the 
Hill— every  one  of  them.  And  I  think  this  went  a  long  way  toward 
softening  the  position,  we'll  say,  of  George  Shultz.  Shultz — George 
Schultz  was  pretty  strong  in  his  first  attitude,  I  think,  for  two  rea- 
sons; and  he  is  certainly  more — I  think  he  has  appeared  before  you — 
he  is  certainly  more  capable  of  expressing  his  own  views  than  I  am, 
but  as  I  recall,  he  has  basically  two  objections. 

The  first — in  the  first  place,  he  didn't  believe  in  price  supports.  He 
did  not  believe  in  the  farm  program,  to  be  perfectly  frank  about  it, 
philosophically.  And  second,  we  had  an  enormous  deficit  in  the  budget 
and  he  was  fighting  to  keep  a  dime  of  additional  expenditure  down, 
regardless  of  the  program,  and  that  was  the  principal  thrust  of  his 
argument. 

I  think  this  was  basically  Dr.  McCracken  and  the  Council  of 
Economic  Advisers,  I  think  weighed  in.  against  it  to  begin  with ;  and  I 
can't  recall  any  specific  comments  they  made — that  is  my  impression, 
now,  of  their  position  then.  Laigely,  again,  on  philosophical  grounds, 
I  think  that  we  ought  not  to  encourage,  we  ought  to  be  working  toward 
the  elimination  of  the  price  support  programs,  and  the  farm  programs, 
completely,  and  not  encouraging  the  raising  of  the  parity  level  and  the 
raising — the  continuation  of  the  program.  But,  because  of  the  con- 
gressional attitude,  there's  no  question  what  everybody's  view,  includ- 
ing Secretary  Shultz,  including  Secretary  Hardin's,  had  been  softened 
immeasurably.  That  was  about  the  net  of  it. 

I  think,  still.  Secretary  Shultz  and  Secretary  Hardin,  in  particular, 
on  balance,  would  have  still  been  slightly  in  favor  of  their  position  of 
the  lower  parity.  My  position  was  the  same.  The  only  thing  that — the 
only  additional  argument  I  had  was  the  proof  of  congressional  activity 
which  I  think  they  all,  at  that  point,  recognized. 

Mr.  Weitz.  Was  there  any  discussion  at  that  meeting  of  any  counter- 
lobbying  on  the  Hill  or  talking  to  Senators  and  Congressmen  in  the 
hope  of  dissuading  them  from  passing  such  legislation  ? 


6064 

Mr.  CoxNALLY.  Yes,  there  was  talk  about  it.  and  there  was  talk 
about — suppose  they  pass  it,  you  can  still  veto  it.  Maybe  they  can  over- 
ride the  veto,  maybe  they  cannot,  but  again,  I  do  not  think  anybody 
wanted  to  undertake  that  kin.d  of  a  program,  at  that  particular 
moment  in  time. 

Mr.  Weitz.  Was  there  any  discussion  of  increased  feed  cost? 

Mr.  CoNNALLv.  Of  what? 

Mr.  Weitz.  Increased  feed  costs. 

Mr.  CoNNALLY.  Feed  costs — Avell,  I  do  not  recall,  except,  no,  I  do  not 
recall. 

Mr.  Weitz.  Are  you  aware  that  that  was  the  sole  justification,  or  the 
principal  justification  mentioned  by  the  Secretiiry  of  Agriculture  in  his 
public  decision? 

Mv.  CoNNALLY.  Ycs,  but  tliis  was  an  assumed  thing,  the  rising  costs 
to  the  daii-ymen,  as  I  mentioned  earlier,  ves,  there  is  no  question  about 
that. 

Mr.  Weitz.  And  in  fact  those  costs  had  been  rising  all  through  the 
previous  year? 

Mr.  Conn  ALLY.  Correct. 

Mr.  Weitz.  So  would  it  be  your  conclusion  that  the  decision  by  the 
Secretary  of  Agriculture  was  not  based  on  any  new  facts  that  had 
come  to  light  from  an  agricultural  point  of  view,  rather  than  perhaps 
some  new  matters  outside  this — those  areas? 

Mr.  CoNNALLY.  I  certainly  cannot  interpret,  or  try  to  read  the  mind 
of  Secretary — the  Secretary  of  Agriculture,  what  he  did.  I  do  think 
that  the  change  in  the  parity  level  was,  in  my  own  judgment,  was  at 
least  substantially  due  to  the  activity  on  the  Hill  and  it  was  a  defensive 
measure  in  order  to  retain  some  latitude  in  the  law,  and  not  permit 
Congress  to  write  a  specific,  mandatory  level  in  there.  And  under  the 
law  under  which  they  were  then  operating,  the  Secretary  of  Agri- 
culture could  set  the  parity  as  low  as  75  percent,  as  high  as  90  percent, 
and  I  think  everybody  concerned,  particularly  the  Secretary  of  Agri- 
culture, indeed,  did  not  want  to  give  up  that  type  of  latitude  m  order 
to  be  faced  with  a  bill  that  said  it  is  going  to  be  85  percent,  or  86,  or  89. 

Mr.  Weitz.  Did  the  President  express  his  views  at  the  meeting? 

Mr.  CoNNALLY.  No,  as  a  matter  of  fact,  I  do  not  remember  that  he 
responded  his  views.  He  listened,  as  he  frequently  does  during  the 
meeting,  and  he  would  turn  to  everybody  and  say,  what  do  you  think, 
what  do  you  think,  what  do  you  think,  and  sometimes  he  would  express 
an  opinion,  sometimes  he  would  not.  We  normally  discussed  the 
matters  among  ourselves.  If  he  feels  very  strongly,  he  will  obviously 
make  a  comment,  he  will  put  in  sometliing,  but  no  decision  was  made 
at  that  moment,  and  I  was  not  present  A\hen  any  decision  ^yas  made — 
either  the  first  time  or  the  second  time — so  I  cannot  enlighten  you 
at  all  about  that. 

Mr.  Weitz.  At  the  conclusion  of  that  meeting,  a  decision  had  not 
yet  been  made,  to  the  best  of  your  knowledge? 

Mr.  CoNNATJvY.  To  the  best  of  my  knowledge,  no. 

Mr.  Weitz.  Or  had  at  least  not  been  communicated  ? 

Mr.  Conn  ALLY.  That  is  correct. 

Mr.  Weitz.  When  did  you  first  become  aware  of  the  change  in  the 
decision  ? 

Ml.  CoNNALLY.  As  far  as  T  know,  when  I  read  it,  T  guess.  I  do 
not  recall  any  particular  communication  with  respect  to  it. 


6065 

Mr.  Weitz.  Did  anyone,  between  the  time  of  this  meeting  on  the 
afternoon  of  the  23d,  and  the  time  on  the  25th,  when  the  decision  was 
publicly  announced,  indicate  to  you  that  in  fact  it  was  to  be  changed, 
or  was  very  likely  going  to  be  changed  ? 

Mr.  CoNNALLY.  Mr.  Weitz,  I  cannot  say  that  they  did.  I  do  not 
recall  anyone  doing  it. 

Mr.  Weitz.  Did  you  talk  about  it  with  the  President  between  the 
time  of  this  meeting  and  the  23d? 

Mr.  CoNNALLY.  No,  I  don't  believe  I  did. 

Mr.  Weftz.  Did  you  talk  with  any  other  Presidential  advisers 
about  it? 

Mr.  CoNNALLY.  I  do  not  think  so.  And  again,  let  me  say  to  you,  this 
was  an  extraneous  matter,  so  far  as  I  was  concerned.  It  was  an  economic 
matter  and  I  was  concerned  with  it  to  that  extent.  I  had  given  my  ad- 
vice, and  the  next  day  I  went  on  to  something  else.  I  was  then  within 
6  weeks  of  being  sworn  in ;  I  was  still  trying  to  learn  my  lesson  at  the 
Treasury.  I  was  appearing  constantly  before  committees,  almost  to 
the  day  I  was  sworn  in  on  February  11,  and  I  have  never  had  a  more 
strenuous,  arduous  time.  So,  frankly,  I  did  not  pay  any  attention  to  it. 
I  promptly  forgot  it,  and  as  far  as  I  know,  no  one  communicated  with 
me  about  it  until  after  the  decision  was  made.  I  have  no  recollection 
of  it. 

Mr.  Weftz.  Was  not  Mr.  Jacobsen,  a  25-year  friend  of  yours,  terribly 
concerned  about  this,  and  wouldn't  his  cause  at  least  have  brought 
it  back  to  mind  ? 

Mr.  CoNNALLY.  Well,  I  do  not  even  know  that  I  even  talked  to  him 
after  that. 

Mr.  Weftz.  Between  the  23d  and  the  25th,  your  recollection  is  that 
you  did  not  meet  with  Mr.  Jacobsen  ? 

Mr.  CoNNALLY.  I  do  not  recall  that  I  did. 

Mr.  Weitz.  Do  3'ou  remember  a  meeting,  either  on  the  night  of  the 
23d,  or  the  night  of  the  24th,  with  Mr.  Jacobsen  and  Mr.  Nelson? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  Now,  the  logs  you  have  given  us  are  logs  that  are  kept 
in  your  office,  are  they  not  ? 

Mr.  CoNNALLY.  Yes. 

Mr.  Weitz.  Any  log,  any  meetings  that  you  would  either  schedule 
after  hours,  or  schedule  outside  of  your  office,  would  not  be  reflected 
in  those  logs? 

Mr.  CoNNALLY.  That  is  correct,  unless  they  were  scheduled  sometime 
in  advance,  or  unless  by  some  means  I  told  the  office  that  I  have  got 
an  appointment  at  8  tonight  or  6  this  afternoon,  or  am  going  so-and-so 
for  dinner,  or  something  of  that  kind.  It  would  not  necessarily  reflect 
a  chance  meeting,  or  something  of  the  kind,  that  occurred  after  I  left 
the  office. 

Mr.  Weitz.  So  a  meeting  that  you  might  have  had  outside  of  the 
office  on  the  night  of  the  24th,  perhaps  sometime  late  at  night  in  the 
Madison  Hotel  for  example,  would  not  be  reflected  in  these  logs? 

Mr.  CoNNALLY.  If  it  had  been  scheduled  it  would,  but  if  it  had  been 
a  chance  meeting  that  came  up  at  the  last  moment  or  almost  by 
happenstance,  it  would  not  be  reflected  on  the  logs. 

Mr.  Weitz.  Now  on  the  evening  of  the  24th,  did  you  attend  the 
"Kickoff  1972"  Kepublican  dinner  ? 


6066 

Mr.  CoNNALLY.  No,  I  did  not.  I^t  me  explain  why  I  didn't.  Simply 
because  T  was  a  Democrat  in  a  Republican  administration,  I  had 
made  my  decision  that  I  was  not  goino^  to  participate  in  any  political 
activities  and  I  did  not  attend  that  dinner.  I  was  asked  to  do  so,  and 
I  explained,  and  T  did  not  attend  it. 

Mr.  Weitz.  Let's  go  back  for  a  minute  tx)  the  jieriod  between  the  first 
decision  by  Secretary  of  Agriculture  on  the  Tith,  and  the  second  deci- 
sion on  the  25th.  Do  you  recall  meeting,  or  talking,  to  Bob  Lilly  during 
that  period  of  time  ? 

Mr.  CoNNALLY.  No,  I  do  not. 

Mr.  Weitz.  Do  you  know  Bob  Lilly  ? 

Mr.  CoNNALLY.  Yes,  I  casually  know  Mr.  Bob  Lilh\ 

Mr.  Weitz.  Can  you  recall  how  long  you  have  known  him,  or  when 
the  fii-st  time  it  was  that  you  met  him  ? 

Mr.  CoNNALLY.  It  was  sometime  when  I  was — during  the  period 
when  I  was  Governor  of  Texas,  I  would  guess  in  the  middle  1960's, 
perhaps.  At  that  time,  I  recall  that  he  was  an  employee,  or  working  in 
some  capacity  I  thought,  with  the  Farm  Bureau— now  I  do  not  know 
whether  it  was  the  Texas  Farm  Bureau  or  the  National  Farm  Bureau 
Federation,  but  I  am  not  even  sure  of  that  point. 

Mr.  Weitz.  Li  what  connection  did  you  meet  him  at  that  time? 

Mr.  CoNNALLY.  T  do  not  have  the  faintest  idea.  I  just  remember  that 
he  was  one  of  the  men  around  the  Capitol  doing  work  before  the  legis- 
lature and  I  have  not  the  faintest  idea  where,  or  under  what  circum- 
stances, I  met  him. 

Mr.  Weitz.  Now,  since  that  time,  somewhere  in  the  mid-t960's,  when 
you  think  you  first  came  in  contact  with  him.  until,  for  example,  you 
had  left  the  governorship,  could  you  estimate  for  us  how  frequently 
you  would  have  come  in  contact  with  Mr.  Lilly — say  on  a  weekly  or 
monthlv  basis,  for  example  ? 

Mr.  CoNNALLY.  I  think — and  again  this  is  a  pure  guess  just  trying 
to  recall  the  years,  how  many  times  you  have  seen  a  casual  acquaint- 
ance, I  would  guess  maybe  T  could  count  them  all  told,  over  a  period  of 
since  I  have  known  him,  on  one  hand,  maybe  five  times  over  a  period 
of  7  or  8  years. 

Mr.  Weitz.  You  sav  he  was  affiliated  Avith  some  Farm  Bureau? 
Perhaps  the  Texas  Farm  Bureau  ? 

Mr.  CoNNALLY.  That  is  mv  understanding,  but  I  cannot  be  sure  of 
that. 

Mr,  Weitz.  And  you  do  not  recall  meeting  with  him,  perhaps  on  a 
number  of  occasions,  in  connection  with  certain  matters  that  were  then 
]>endin£ri  either  before  the  legislature  or  the  Texas  administration? 

Mr.  CoNNALLY.  Not  unless  he  happened  to  he  in  a  large  group  of 
people.  T  have  no  recollection — can  you  elaborate  what  type  of  legisla- 
tion ?  I  do  not  know;  I  am  totally  at  a  loss  to  know  what  you  are  re- 
ferring to. 

Mr.  Weitz.  Well,  in  jreneral,  with  regard  to  a  number  of  pieces  of 
legislation — you  do  not  recall  for  example  meeting  with  him  fre- 
(|uently  over  numerous  matters  that  might  arise  over  a  period  of  time? 

Mr.  CoNNALLY.  No,  but,  again  let  me  point  out  to  you,  you  obvious- 
ly— and  I  am  not  trying  to  read  your  mind — but  you  obviously  have 
some  reason  foi-  asking  the  question,  and  I  want  to  be  as  responsive  as 
I  knov;  how  to  be.  At  least  once  a  month,  sometimes  every  2  weeks,  as 


6067 

Governor,  we  would  have  proclamation  day  and  I  would  go  out  in  a  big 
reception  room  and  we  would  sign  bills  and  do  all  kinds  of  honors  to 
people.  We  would  give  awards,  we  would  recognize  every  type  of  day, 
we  would  recognize  every  type  of  queen,  and  we  would  be  photo- 
graphed ;  we  would  have  the  room  packed  with  people.  It  is  entirely 
possible  that  he  could  have  been  in  the  office  or  in  a  group  like  that  on 
several  occasions  without  me  having  the  faintest  memory  of  it.  But 
so  far  as  meeting  with  him  about  any  particular  legislation,  I  have  no 
memory  of  it. 

Mr.  Weitz.  And  if  this  happened,  if  he  were  to  of  met  with  you 
several  times  a  week,  or  several  times  a  month,  on  a  repeated  basis 
over  a  number  of  months,  over  a  number  of  years  in  a  fairly  small 
group  or  even  just  the  two  of  you,  you  would  probably  recollect  that? 

Mr.  CoNNALLY.  Oh,  I  think  I  would, 

Mr.  Weitz.  Now  during  the  time  between  March  12  and  March  25, 
do  you  recall  meeting  Mr.  Lilly  at  Page  Airways  in  Washington,  in  the 
Washington  Airport  ? 

Mr.  CoNNALLY.  No,  I  do  not. 

Mr.  Weitz.  Do  you  recall,  would  your  records  show,  where  you  were 
either  on  the  day  of  JSIarch  19  or  March  20  of  1971  ? 

Mr.  CoNNALLY.  Yes,  I  guess  it  would. 

Mr.  Weitz.  Would  you  provide  those  two,  that  would  be  part  of  the 
segment  in  late  February.  I  think  it  would  be  useful  to  see  all  of 
March. 

Mr.  Conn  ALLY.  All  right,  we  will  give  you  all  of  it,  but  I  certainly 
have  no  recollection  of  meeting  him  at  Page  Airways. 

Mr.  Weitz.  Do  you  remember,  perhaps  a  chance  meeting,  or  passing 
him  and  seeing  him  in  the  airport  on  that  day  ? 

Mr.  CoNNALLY.  No,  because  frankly,  I  do  not  recall  that  I  was  out 
there,  and  I  do  not  recall  I  went  anywhere  during  that  period. 

Mr.  Weitz.  You  do  not  remember  any  trip  out  of  Washington,  let's 
say  between  the  12th,  which  was  the  day  of  the  first  decision  of  the 
Secretary  and  the  meeting  with  the  President  on  the  23d,  for  example  ? 

Mr.  CoNNALLY.  No,  I  do  not.  We  can  certainly  check  it  though,  and 
I  would  be  delighted  to  do  so,  but  I  certainly  do  not  remember. 

Mr.  Weitz.  Now  I  take  it  you  do  not  go  to  Page  Airways  unless  you 
are  actually  in  transit  ? 

Mr.  CoNNALLY.  I  do  not  think  I  have,  no. 

Mr.  Weitz.  And  normally  when  you  travel,  or  during  that  period 
when  you  were  traveling,  would  you  noi-nially  travel  by  private  plane? 

Mr.  CoNNALLY.  Yes. 

Mr.  Weitz.  If  you  are  traveling  on  that  day 

Mr.  CoNNALLY.  Now  by  private  plane  ? 

Mr,  Weitz.  As  opposed  to  commercial  aircraft  ? 

Mr.  CoNNALLY.  Yes. 

Mr.  Weitz.  A  private  plane  that  would  have  in  Washington  de- 
parted or  arrived  at  Page  Airways.  So  if  your  records  would  show  that 
you  were  in  transit  on  one  of  those  2  days,  in  or  out  of  Washington, 
and  you  indicate  that  at  least  you,  for  some  period  of  time,  were  in 
Page  Airways  terminal  ? 

Mr.  CoNNALLY.  It  might  well  do  it. 

Mr.  Weitz.  There  would  be  no  other  way  vou  would  come  and  go 
during  that  period  if  you  were  traveling  by  air  ? 


6068 

Mr.  CoNNALLT.  No — and  not  be  there — no,  I  don't  think  so. 

Mr.  Weitz.  Now  you  do  not  recall  seeing  Mr.  Lilly.  Do  you  perhaps 
recall  seeing  a  group  of  people,  members  and  employees  of  AMPI 
in  the  Page  Airways  sometime  during  that  period,  passing  them 
briefly,  and  perhaps  seeing  Mr.  Nelson  among  them  ? 

Mr.  CoNNALLY.  During  this  time  period  ?  No. 

Mr.  Weitz.  Well,  let  me  list  a  number  of  people,  can  you  tell  me 
who  you  believe  would  be  the  person  you  would  recognize  most  read- 
ily, or  would  know  the  best,  if  1  mention  the  following  people :  Kieffer 
Howard 

Mr.  CoNNALLY.  Who  ? 

Mr.  Weitz.  Kieffer  Howard,  Harold  Nelson,  David  Parr,  and  Bob 
Lilly;  can  you  tell  me  who  of  those  gentlemen  you  would  think  you 
would  know  the  best  ? 

Mr.  CoNNALLY.  I  would  probably  recognize  Dave  Parr  first;  sec- 
ondly, probably  Mr.  Harold  Nelson ;  third,  Mr.  Lilly ;  and  I  am  not 
even  sure  I  know  Mr.  Howard  at  all.  perhaps  I  have  met  him,  but  the 
name  does  not  strike  a  chord  with  me  at  all. 

Mr.  Weitz.  You  would  recognize  Mr.  Nelson  over  and  perhaps 
speak  to  hirn  in  a  chance  meeting,  ahead  of  Mr.  Lilly  you  think  ? 

Mr.  CoNNALLY.  Oh,  yes. 

Mr.  Weitz.  And  you  do  not  recall  any  such  meeting  held  ever  at 
Page  Airways  during  this  period  of  time? 

Mr.  Cox N ALLY.  No ;  I  do  not. 

Mr.  Weitz.  Did  you  ever,  between  the  period  of  the  12th  and  the 
25th — between  the  first  decision  and  the  second  decision — ever  com- 
municate to  any  representative  of  AMPI  your  assessment  that  you 
thought  this  decision  would  in  fact  change,  and  a  new  decision  would 
be  made  to  raise  supports  by  the  administration  ? 

Mr.  CoNNALLY.  I  don't  recall  that  I  did.  no.  As  a  matter  of  fact,  I 
do  not  think  I  talked  to  anybody  excej^t  Mr.  Jacobsen  in  the  communi- 
cation that  we  have  already  talked  about  and  during  the  period  be- 
tween the  12th  and  the  25th.  I  frankly  had  no  real  reason  to  be  opti- 
mistic about  a  change  as  far  as  the  administration  was  concerned,  be- 
cause we  had  been  down  this  road  and  the  decision  was  made  on  the 
12th  to  set  the  level  at  SI  percent,  and  I  frankly  felt  that  if  it  was 
changed  at  all  it  Avas  going  to  have  to  be  changed  by  the  Congress  at 
that  point. 

Mr.  Weitz.  As  you  have  testified,  you  do  not  remember  meeting  dur- 
ing this  period,  either  with  Mr.  Nelson,  together  with  Mr.  Nelson,  Mr. 
Jacobsen,  Dr.  Mehren  ? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  And  if  either  of  those  gentlemen  recall  that,  you  think 
that  their  memory  will  be  faulty  or  perhaps  yours  will  be  faulty  on  this 
point  ? 

Mr.  Eckiiardt.  Why  don't  you  ask  him  to  just  speculate  on  that  ? 

Mr.  Weitz.  No;  I  am  ti-ying  to  establish  how  firm  his  recollection  is 
for  that  ))eriod  of  time. 

Mr.  CoNNALLY.  I  do  not  know  how  firm  my  recollection  is,  and  I  am 
not  trying  to  be  facetious  Avith  you — let  me  again  point  out  to  you  that 
I  was  working  literally  18  hours  a  day,  7  days  a  week,  and  I  mean  7 
days  a  week.  Saturdays  and  Sundays,  trying  to  cover  the  giound. 
trying  to  get  briefed  on  what  the  Treasury  was,  eveiy  available  hour. 
I  took  home — 1  had  reading  material ;  T  read  as  nnich  as  10  hours  every 


6069 

singfle  night,  on  reports,  documents,  and  Divisions  of  the  Treasury, 
what  they  did  because  of  the  constant  work  I  was  doing  on  the  Hill  in 
testifying. 

Now  it  is  entirely  possible  that  a  chance  meeting — I  would  not  re- 
member. But  I  am  saying  to  you  with  all  the  sincerity  that  I  possess 
that  I  do  not  recall  a  meeting  of  this  type  with  these  people  within 
this  time  period. 

Mr.  Weitz.  And  as  you  say,  you  were  actually  taken  by  surprise, 
you  were  actually  pessimistic  about  the  change  during  this  period  ? 

Mr.  CoNNALLY.  I  was,  indeed. 

Mr.  Weitz.  So  your  recollection  is  that  you  would  not  have  commu- 
nicated to  any  dairy  people  the  optimism  about  the  new  decision  ? 

Mr.  CoNNALLY.  Not  in  this  time  j^eriod;  I  do  not  think  there  is  any 
basis  upon  which  that  I  might  have  reflected  optimism.  And  this,  I 
probably  would  have  done,  I  certainly  would  have  reflected  optimism 
with  their  chances  on  the  Hill  because  every  report  we  were  getting 
clearly  indicated  that  the  Congress  was  going  to  act.  But  I  had  no 
reason  to  think  that  this  was  going  to  be  translated  into  action  by  the 
administration. 

Mr.  Weitz.  Did  there  come  a  time  during  1071  when  you  received  a 
communication  from  Mr.  Jacobsen  concerning  some  cash  that  he  had 
obtained  from  representatives  of  AMPI  ? 

Mr.  CoNNALLY.  In  about  the  middle  of  June  or  the  latter  part  of  June 
or  the  first  of  July,  and  T  cannot  be  certain,  I  met  with  Mr.  Jacobsen  ; 
he  told  me  that  the  milk  producers — and  I  cannot  be  more  specific  than 
that  because  I  frankly  do  not  remember  and  I  do  not  think  he  is  more 
specific  than  me — were  prepared  to  start  making  contributions  in  1971 
to  committees  and  to  candidates  for  dinners^ — all  types  of  activities 
looking  toward  the  election  in  1972.  He  said  then  that  he  had  available 
$10,000  in  cash  to  be  given  to  any  committee  or  any  candidates  that  1 
might  designate,  and  I  said  now  Jake.  I  am  not  interested  in  that.  I 
said  I  am  in  this  administration  as  a  Democrat.  I  have  refused  to  go  to 
any  f undraising  dinners ;  I  did  not  even  go  to  the  dinner  for  the  Presi- 
dent. I  would  not  like  to  be  in  the  position  of  trying  to  I'uise  money  for 
Democrats  against  the  Republicans  as  long  as  I  am  serving  in  a  Repub- 
lican administration. 

By  the  same  token,  I  wouldn't  feel  right  about  trying  to  suggest  that 
contributions  be  given  to  Republicans  against  members  of  my  own 
party.  And  I  have  made  the  decision  tliat  I  am  going  to  be  as  nonpoliti- 
cal  as  I  possibly  can  be  and  I  am  not  going  to  take  any  interest  in 
party  partisan  politics,  or  party  politics,  during  the  foreseeable  future, 
and  I  interpret  that  to  mean  so  long  as  I  hold  this  office.  And  that  was 
the  end  of  it. 

Mr.  Weitz.  Did  he  tell  you  how  he  had  obtained  the  money? 

Mr.  CoNXALLY.  No ;  he  discussed  no  details  and  I  was  not  sure  he  had 
the  money ;  he  just  said  that  it  was  available,  that  amount,  and  that's  all 
he  said  and  I  stopped  the  conversation  and  I  said  what  I  did.  It 
ended  it. 

Mr.  Weitz.  Did  you  tell  him  to  return  the  money  ? 

Mr.  CoNNAixY.  No ;  I  did  not  tell  him  what  to  do  with  it. 

Mr.  Weitz.  Did  he  tell  you  where  he  was  keeping  the  money? 

Mr.  CoNNALivY.  No ;  and  he  did  not  tell  me  he  had  it.  He  just  said 
tliere  was  $10,000  available  to  be  jriven.  I  franklv  didn't  know  whether 


6070 

he  had  it  or  whether  somebody  else  had  it,  I  had  no  way  of  knowing 
that,  I  did  not  ask  him,  I  did  not  want  to  know. 

Mr.  Weitz.  Did  he  say  it  was  in  cash,  or  did  he  not  specify  ( 

Mr.  CoNNALLY.  As  I  recall,  it  was. 

Mr.  Weitz.  Was  it  likely  that  $10,000  was  available  in  cash — would 
be  available  without  it  actually  having  been  in  the  actual  possession  of 
either  Mr.  Jacobsen  or  someone  who  was  willing  to  turri  it  over  to  Mr. 
fTacobsen  ? 

Mr.  CoNNALL-Y,  Well,  I  am  not  going  to  start  speculating. 

Mr.  Weitz.  What  did  you  understand  him  to  mean  ? 

Mr.  Conn  ALLY-  Well  I  understood  him  to  mean  just  what  he  said 
that  it  was  available. 

Mr.  Weitz.  Wasn't  that  a  a  euphemism  for  I  had  the  cash  ? 

Mr.  Conn  ALLY.  Not  necessarily  in  my  mind,  I  do  not  know  whether 
he  had  it  or  whether  he  did  not^  but  I  interpreted  him  to  mean  that 
either  he  had  it  or  he  could  get  it. 

Mr.  Weitz.  Why  did  he  make  such  money  available? 

Mr.  CoNNALLY.  I  think  you  would  have  to  get  a  better  answer  from 
him  than  from  me.  I  am  not  sure  but  again  I  assume  he  thought  that 
it  would  do  me  some  good,  to  get  some  credit  for  some  Members  of 
Congress,  if  indeed  they  thought  that  I  encouraged  AMPI  to  give  them 
a  contribution.  That  was  my  assumption;  that  was  my  interpretation. 

Mr.  Weitz.  Of  course  it  could  have  been  easier  for  him  to  ask  who 
you  wanted  to  recommend  that  AMPI  or  TAPE  give  sucli  money  ? 

Mr.  CoNNALLY.  That's  what  he  did.  He  said  it  is  available  for  you  to 
designate.  "V\nio  do  you  want  it  to  go  to  ? 

Mr.  Weitz.  In  cash,  it  was  available  ? 

Mr.  CoNNALLY.  Yes,  in  cash ;  that  is  what  I  understood,  it  was  in 
cash. 

]Mr.  Weitz.  That  would  be  separate  for  moneys  that  w^ere  in  a  bank 
account  of  some  organization  where  he  could  write  out  a  check  from 
any  committee  at  any  time  ? 

Mr.  CoNNALLY.  We  didn't  get  into  any  of  that  at  all. 

Mr.  Weitz.  Well,  from  your  experience,  as  an  example,  as  head 
of  Democrats  for  Nixon,  did  you  normally  keep  cash  available  for 
certain  purposes  ? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  And  was  it  your  experience  tliat,  for  example,  organiza- 
tions that  gave  contributions  of  money  to  you,  did  they  normally  deal 
in  cash  ? 

Mr.  CoNNALLY.  No,  in  Democrats  for  Nixon  we  had  a  rule,  and  I 
established  it  from  the  first  day,  I  said  there  are  certain  things — one, 
this  is  not  going  to  be  primarily  a  fundraising  organization.  I  said  1 
think  there  is  going  to  be  plenty  of  money  in  this  campaign  and  we  are 
not  going  to  do  that.  Now  we  will  raise  some,  T  do  not  mean  we  won't 
attempt  to  do  it  in  a  ratliei-  routine  fashion,  but  second,  I  told  eveiy- 
body  on  the  staff  that  I  want  to  take  no  amounts  of  cash  of  any  size 
at  all — I  mean  $2,  or  $3,  or  $5,  or  $10  that  come  in  by  mail,  perhaps 
yes,  but  no  sizable  casli  contributions. 

I  said.  No.  3,  I  want  you  to  check  every  check  that  comes  in  and  be 
sure  if  there's  any  question  about  whether  or  not  that  check  is  a  cor- 
porate check;  go  back,  write  them  a  letter  or  call  them  on  the  tele]:)hone 
and  say:  "We  have  your  check;  is  it,  indeed,  a  personal  chock?  We 
don't  want  to  get  any  corporate  contributions." 


6071 

And  those  were  things  that  I  laid  down  and  so  far  as  I  know  we 
followed  them  religiously  during  the  whole  campaign. 

Mr.  Weptz.  Did  Mr.  Jacobsen,  in  this  time  frame,  indicate  whether 
or  not  this  $10,000  cash  that  was  available  was  corporate  funds  ? 

Mr.  CoNNALLY.  During  this  time  he  indicated  that  they  were  pre- 
pared— that  he  was  prepared — he  brought  up  the  suDJect  again, 
wanted  to  know  whether  we  wanted  a  contribution  from  AMPI,  that 
he  had  $10,000  in  cash  or  we  could— and  I  said  no,  I  do  not  want  it.  I 
said  I  do  not  want  that  sizable  contribution  in  cash  and  I  said,  as  a 
matter  of  fact :  "Jake,  you've  got  lots  of  problems  in  AMPI"— in  the 
meantime  they  had  had  a  complete  turnover  of  personnel  and  man- 
agement had  gone  through  a  rather  serious  reorganization,  all  of  which 
I  am  not  familiar  with,  but  I  do  know  that  they  had  gone  through — 
tliey  had  tax  problems.  I  know  they  had  antitrust  problems  about  that 
time  and  I  frankly  said  to  him,  "We  would  just  prefer  not  to  take  any 
money  from  you." 

I  would  not  say  that  there's  anything  wrong  with  it,  necessarily,  but 
I  just  think  it  is  the  better  part  of  wisdom  for  us  not  to  have  any  cash 
around. 

And  we  took  as  you  know,  I  assume,  you  can  check  the  records,  we 
did  take  a  $25,000  contribution  from  a  Kentucky  group  which  I  believe 
is  SPACE,  or  their  political  arm,  and  we  took  a  $6,000  political  con- 
tribution from  the  Missouri  group  and  that  is  the  total  contributions 
that  I  have  any  knowledge  of  from  the  milk  industry. 

Mr.  Weitz.  ok  ;  we  will  return  to  their  activity  later.  In  connection 
with  that,  had  Mr.  Jacobsen  ever  made  a  similar  offer  to  you  before? 

JNIr.  CoNNALLY.  No. 

Mr.  Weitz.  Did  he  ever  make  a  similar  offer  after  the  one  in  1972  ? 

Mr.  CoNNALLY.  No. 

INIr.  Weitz.  Did  you  specifically  tell  him  to  return  the  money  ? 

Mr.  CoNNALLY,  No,  I  just  said :  "You  do  whatever  you  want  with 
these  various  funds.  You  know  who  your  friends  are."  I  said  I  frankly 
do  not  want  any  part  of  it  and  I  did  not  suggest  one  place  that  he  put 
a  dime  that  he  raised  for  anybody. 

Mr.  Weitz.  Did  he  indicate  whether  he  had  intended  the  moneys  to 
go  to  either  Democrats  or  Republicans? 

Mr.  Cox  N ALLY.  No. 

Mr.  Weitz.  Did  you  know  what  he,  in  fact,  did  with  the  money  ? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  Do  you  know  whether  he,  in  fact,  still  has  the  money  ? 

Mr.  CoNNALLY.  No. 

JNIr.  Weitz.  Do  you  maintain  a  savings  deposit  box  in  the  Citizens' 
National  Bank  in  Austin? 

Mr.  CoNNALLY.  No,  I  do  not. 

Senator  Weicker.  Am  I  correct,  then  Governor,  in  my  understand- 
ing of  what  you  testified  to  so  far  that  insofar  as  1969  and  1971  are 
concerned,  the  only  mention  to  you  of  political  moneys  from  AMPI, 
from  Jake  Jacobsen,  from  Bob  Lilly,  George  Mehren,  Harold  Nelson, 
Dave  Parr,  was  in  this  particular  instance  of  May,  June,  July  1971, 
insofar  as  the  $10,000  availability  of  funds  was  concerned,  otherwise 
that  you  had  no  conversations  relative  to  political  contributions  to 
either  the  Committee  To  Re-Elect  the  President,  to  the  Republican 
Party,  with  any  of  these  individuals  in  1969  or  1971  ? 


6072 

Mr.  CoNNALLY.  Say,  that  except  the  contributions  of  these  two 
milk  co-ops  in  1972. 

Senator  Weicker.  In  1969  and  1971,  the  only  instance  of  any  dis- 
cussion of  moneys,  as  between  yourself  and  these  individuals  and/or 
organizations,  is  this  incident  of  May,  June,  Julv.  whatever  the  specifc 
date  was,  the  $10,000  fund  ? 

Mr.  CoNNALLY.  That  is  absolutely  correct  in  terms  of  specific  money, 
Senator.  In  the  1969  conversation,  and  I  do  not  recall  when  it  was,  in 
explaining  to  me  what  they  were  doing,  they  were  going  to  set  up  a 
political  arm  similar  to  COPE,  to  handle  the  contributions  of  the  milk 
industry,  but  this  was  a  pure  structural  conversation  dealing  with  the 
method  of  providing  political  funds.  It  had  nothing  to  do  with  con- 
tributions to  any  individual  or  to  parties  for  that  matter. 

Senator  Weicker.  Right.  In  1971,  and  just  so  that  we  can  be  specific 
on  this  point,  the  conversation  of  the  $10,000  was  a  conversation  that 
Jake  Jacobsen  had  with  you ;  is  that  correct  ? 

Mr.    CoNNALLY.  Yes,  sir. 

Senator  Weicker.  But  at  no  time  during  1971  were  moneys  dis- 
cussed— political  contributions  discussed — between  yourself  and 
others — Nelson,  Mehren,  Lilly,  Parr,  Milton  Semer — is  it? 

Mr.  CoNNALLY.  I  do  not  know.  Can  yon  identify  that? 

Senator  Weicker.  The  Washington  attorney  for  AMPI. 

Mr.  Weitz.  He  is  a  partner  of  IMr.  Jacobsen  in  his  Washington  of- 
fice— or  was,  at  that  time. 

Mr.  CoNNALLY.  I  did  not  first  recognize  the  name,  I  think  perhaps 
I  have  heard — no,  the  answer  to  your  questions,  that  is  absolutely  cor- 
rect. And  I  might  even  go  further  Senator  and  simply  say  that  at  no 
time  to  this  good  day  do  I  know,  nor  has  anyone  ever  told  me  what  they 
contributed  to  whom,  or  by  what  means,  or  in  what  amount.  I  had 
nothing  to  do  with  their  political  campaign  contribution  activities. 

Senator  Weicker.  Let  me  just  ask  then,  and  let  counsel  continue  in 
a  natural  progression.  But  just  while  I  am  on  the  point,  aside  from 
the  May  1971  conversation  with  Jacobsen  and  Jacobsen  repeating  this 
fact  to  you  in  1972,  was  there  any  other  discussion  of  political  money 
as  between  yourself  and  this  group  ? 

Let  me  be  specific,  I  have  a  list  here,  I  put  down  a.  list  of  all  those 
persons  and  organizations  that  appear  in  the  milk  hearing,  the  Asso- 
ciated Milk  Producers,  Inc.,  AMPI,  TAPE— political  arm  of  AMPI— 
is  it  CTAPE,  is  that  correct?  Harold  Nelson,  George  Mehren,  Bob 
Lilly,  Da\'id  Parr,  Milton  Semer,  who  is  the  Washington  attorney  for 
AMPI  and  a  former  law  partner  of  Jacobsen,  Joe  Long,  who  is  Austin 
attorney  for  AMPI,  Marion  Harrison,  Washington  attorney  for 
AMPI;  Murrav  Cliotiner,  Washinsfton  attorney  for  AMPI;  Pat 
Hillings,  Washington  attorney  for  AMPI;  Mid- America  Dairymen. 
Inc.;  Gar^^  Hanman,  executive  vice  president;  ADEPT,  political  arm 
of  AMPI;  Dairymen.  Inc.;  and  SPACE,  the  political  arm  of  Dairy- 
men. Inc.,  discussion  as  to  political  monevs.  witli  the  exception  of  the 
contributions  that  vou  have  mentioned  from  SPACE — is  it — from 
what  was  the  other  one  ? 

Mr.  Weitz.  SPACE  was  the  larger  amount. 

Mr.  CoNNAixY.  One  gave  us  25  and  one  gave  us  6,  frankly  I  don't 
remember  which  it  was. 

Senator  Wek^ker.  And  those  two.  and  the  discussion  that  have 
come  here  with  Jacobsen  on  the  $10,000? 


6073 

Mr.  CoNNALLY.  That's  all. 

Senator  Weicker.  And  that  is  it  ? 

Mr.  CoNNALLY.  Yes,  sir ;  that  is  it,  and  I  might  parenthetically  saj', 
Senator,  a  lot  of  those  names  you  read  off,  I  do  not  even  know. 

Mr.  Weitz.  Now,  in  that  connection,  do  you  recall  any  subsequent 
conversations  with  Mr.  Jacobsen,  still  in  1971,  let  us  say  in  the  fall  of 
1971 — again,  raising  either  this  matter  or  some  related  moneys  that 
he  had  obtained  or  made  available,  perhaps  in  the  same  way  that 
he  had  made  the  earlier  $10,000  available  to  you  ? 

Mr.  CoNNALLY.  I  do  not — not  only  do  not  remember,  it  never  hap- 
pened. I  not  only  do  not  remember  it — I  misstated  myself.  I  not  only 
do  not  remember  it,  it  did  not  happen. 

Mr.  Weitz.  Now  before  we  leave  this,  I  just  want  to  make  clear, 
when  Mr.  JacObsen  raised  this  matter  with  you,  did  he  make  it  fairly 
clear  this  money  was  from  AMPI  ? 

Mr.  CoNNALLY.  No ;  frankly,  I  assumed  it  was  from  the  milk  people, 
but  to  say  it  was  from  AMPI,  I  could  not  say. 

Mr.  Weitz.  Well  let  me  be  more  specific,  I  am  not  picldng  between 
the  co-ops,  but 

Mr.  CoNXALLY.  I  assumed  it  was  milk  money ;  I  do  not  recall  that  he 
made  that  clear,  but  I  think  there  was  no  doubt  in  my  mind  that  that's 
what  it  was. 

Mr.  Weitz.  Did  he  make  it  clear,  for  example,  that  it  was  money 
from  TAPE,  or  from  AMPI  ? 

Mr.  CoNNALLY.  No ;  that  is  what  I  am  saying. 

Senator  Weicker.  If  I  might  just  ask — if  I  could  hold  the  proceed- 
ings for  a  minute.  Governor,  would  you  like  a  respite  here,  a  coke? 

[Off  the  record  discussion.] 

Mr.  AVeitz.  Shall  we  proceed  back  on  the  record  ? 

Mr.  CoNNAixY.  Certainly. 

Mr.  Weitz.  Before  we  leave  the  period  1971.  let  me  just  ask  you  one 
question.  In  connection  with  that  discussion  between  Mr.  Jacobsen  and 
yourself,  was  there  any  reference  in  that  discussion  to  the  earlier  milk 
price  suppport  decision  ? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  When  he  mentioned  the  availability  of  the  $10,000  cash? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  Would  you  provide  to  us,  in  addition  to  the  periods  you 
previously  mentioned,  the  log  or  logs  that  would  identify  the  day — 
possibly  identify  the  day  in  which  Mr.  Jacobsen  talked  to  you  about 
that  matter  ? 

Mr.  CoNNALLY.  I  would  be  glad  to. 

Mr.  EcKiiARDT.  Who  talked  to  him  ? 

Mr.  Weitz.  When  Mr.  Jacobsen  talked  to  him.  I  would  suggest  you 
might  start  as  early  as  May  1971,  and  perhaps  go  forward  about  2  or 
3  months  until  you  ai*e  reasonably  sure  that  you  have  covered  the 
period. 

Mr.  EcKHARDT.  I  am  quite  sure  that  the  only  notation  that  would 
appear  on  the  log  would  be  the  name  of  Jacobsen. 

Mr.  Weitz.  That  would  be  sufficient.  If  it  does  not  refresh  your 
recollection  any  further,  then  just  provide  us  with  those  logs  and  we 
will  review  them. 

Now  did  there  come  a  time  in  early  1972  when  you  did,  in  fact,  meet 
again  with  Mr.  Jacobsen  and  perhaps  others  from  AMPI  ? 


6074 

Mr.  CoNNALLY.  Yes. 

Mr.  AVeitz.  Would  you  like  to  tell  us  about  that  meeting? 

Mr.  CoNNALLY.  This  meeting  occurred,  as  I  recall,  on  March  16, 1972. 
Mr.  Jacobsen  and  Mr.  Harold  Nelson  and  Dr.  George  Mehren  came 
into  my  office  and  the  meeting  was  for  the  purpose,  really,  of  telling  me 
about  the  change  of  management  in  the  organizational  change  of 
AMPI.  But,  primarily,  to  introduce  to  me  Dr.  George  Mehren ;  and  in 
the  process,  it  was  a  meeting  in  which  I  asked  them  how  they  were 
doing,  what  their  problems  were,  and  as  I  recall  they  started  off  and 
they  had  a  number  of  problems.  We  finally  got  into  that.  They  talked 
about — if  my  memory  serves  me  correctl}^ — their  marketing  practices, 
this  was  a  problem  that  was  concerning  them. 

They  talked  about  the  pricing  of  the  formulas  for  pricing  buttered 
cheeses  and  so  forth,  all  of  which  was  so  complicated  I  did  not  quite 
understand  it.  I  never  quite  understood  it  and  they  talked  about  the 
antitrust  suit  that  had  been  filed  against  them,  I  believe,  in  Chicago — 
at  least  it  was  in  the  Midwest.  These  are  the  only — there  might  have 
been  one  or  two  other  things,  I  do  not  recall,  but  these  are  the  subjects 
that  were  discussed  at  that  particular  meeting. 

Mr.  Weitz.  In  what  connection  were  they  discussed  ? 

Mr.  CoNNALLY.  I  would  say  in  the  connection  of  just  being  an  in- 
formative type  of  thing,  just  informing  me  of  what  some  of  their  prob- 
lems were,  and  telling  me  what  some  of  the  difficulties  were  with  which 
they  were  dealing  and  that  was  about  the  extent  of  it. 

Mr.  Weitz.  This  was  the  fii^t  time  you  had  met  Dr.  Mehren  ? 

Mr.  CoNNALLY.  I  believe  it  was — it  was  the  first  time  that  I  recall 
ever  having  met  him.  Now  I  will  let  it  go  at  that.  I  am  sure  he  would 
be  offended  if,  indeed,  I  had  met  him  somewhere  earlier  and  did  not 
remember  it,  but  I  believe  this  was  the  first  time  I  had  ever  met  him. 

Mr.  Weitz.  Why  did  Mr.  Nelson  accompany  him  ? 

Mr.  CoNNALLY.  Why  ? 

Mr.  Weitz,  Yes. 

Mr.  CoNNALLY.  Well,  I  really  do  not  know. 

]Mr.  Weitz.  Dr.  Mehren  had  replaced  Mr.  Nelson  as  I  understand  it  ? 

Mr.  CoNNALLY,  Yes ;  that  is  correct,  but  I  understood — then  I  asked 
in  as  courteous  a  way  as  I  knew  how,  what  the  structure  was,  and  they 
simply  explained  that — well.  Dr.  Mehren  had  become  the  head  of  the 
organization — I  do  not  know  what  you  would  call  him  but  Mr.  Nelson 
was  still  a  consultant  I  believe,  or  a  lawyer  or  something  for  them, 
and  he  was  still  going  to  be  active  with  them,  so  that  was  the  explana- 
tion they  gave  me. 

Mr.  Weitz.  Were  there  any  other  matters  discussed  that  you  recall  ? 

Mr.  CoNNALLY.  No ;  I  do  not  recall  any. 

Mr.  Weitz.  Now,  in  connection  w4th  raising  these  matters,  did  they 
ask  for  your  help  or  ask  for  any  specific  action  on  your  part? 

Mr.  CoNNALLY,  No ;  I  do  not  recall  that  they  did.  I  do  not  really  be- 
lieve that  that  was  the  purpose  of  the  meeting. 

Mr.  Weitz.  Ix>t  us  take  them  one  at  a  time,  for  example,  marketing 
practices — that  would  be  within  the  jurisdiction  of  the  Secretary  of 
Agriculture  ? 

Mr.  CoNNALLY.  Right. 

Mr.  Weitz.  Did  they  ask  you  to  call  the  Secretary  at  that  time,  Butz  ? 

Mr.  CoNNALLY.  No ;  and  I  did  not. 


6075 

Mr.  Weitz.  Do  you  know  whether  they  ever  contacted  Secretary 
Butz  directly  ? 

Mr.  CoNNAi.LY.  Oh,  I  am  sure  that  they  were,  but  I  do  not  know 
whether  they  specified  that. 

Mr.  Weitz.  Is  there  any  problem  that  was  then  a  particular  problem 
such  as  the  previous  year  ? 

Mr.  CoNNALLY.  No,  no,  no,  and  I  miofht  parenthetically  add  there 
that  so  far  as — if  there  was  indeed  a  problem  with  respect  to  support 
prices  in  1972,  I  was  unaware  of  it.  I  was  not  a  participant,  really,  in 
any  of  the  discussions  relating  to  it,  and  so  I  assumed  that  there  really 
was  no  <rreat  problem  in  connection  with  it. 

Mr.  Weitz.  Now  you  mentioned  tlie  antitrust  suit,  do  you  know  any- 
thing further  about  that  antitrust  suit  ? 

Mr.  CoNNALLY.  No ;  they  pointed  out  that  they  were  really  very  ir- 
ritated about  it,  obviously,  and  expressed  the  thought  that  they 
thought  the  Departuient  of  Justice  had  gone  too  far,  that  they  were 
irritated,  that  they  thought  it  was  aoing  to  have  political  repercussions 
all  through  the  Midwest,  and  I  said,  "Well,  I  am  sorry  to  hear  it.  I  am 
sure  the  suit  was  not  filed  unless  the  Justice  Department  felt  there 
was  ample  justification  for  it."  And  they  said,  "Well,  nevertheless,  we 
are  very  upset  with  it,  and  we  think  it  is  going  to  have  a  very  damag- 
ing effect." 

Mr.  Weitz.  A  damaging  effect  upon  whom  ? 

Mr.  CoNNALLY.  Politically,  upon  the  Republican  Party. 

Mr.  Weitz.  Wliat  about  on  the  farmers?  Oi'  farm  co-ops? 

Mr.  CoNNALLY.  Obviously,  and  on  farm  co-ops,  but  again  I  don't  re- 
call the  details.  In  the  process  of  saying  tliat  they  didn't  think  that 
the  suit  was  justified,  they  said  they  thought  the  Justice  Department 
moved  too  quickly,  that  they  thouaht  that  if,  indeed,  here  were  prac- 
ices  that  they  could  have  known  about,  or  been  advised  of,  the}-  prob- 
ably could  have  corrected  them  without  the  lawsuit.  But  it  was  done 
then,  and  I  said,  "It  is  done  and  there's  nothing  I  can  do  about  it,'"  but 
I  do  not  remember. 

Mr.  Weitz.  Had  they  been  in  contact  with  Mr.  Mitchell  up  to  that 
point  ? 

Mr.  CoNNALLY.  I  do  not  recall  that  they  did,  but  I  called  him — 
either  that  day  or  at  a  later  time  and  of  course  in  the  meantime  he 
Avas,  as  I  recall  at  the  time  of  that  meeting,  he  was  no  longer  Attorney 
General.  I  called  him  and  simply  reported  to  him  the  substance  of 
the  meeting,  with  respect  to  the  antitrust  things,  and  I  said  I  thought 
they  were  quite  irritated,  and  that  he  ought  to,  from  a  political  stand- 
point, he  ought  to  consider  how  to  work  around  it. 

Mr.  Weitz.  Did  you  call  Mr.  Mitchell  in  the  presence  of  those 
three  gentlemen  ? 

Mr.  CoNNALLY.  I  do  iiot  think  so.  If  I  did,  it  would  have  been  highly 
unusual. 

Mr.  Weitz.  Why  ? 

Mr.  CoNNALLY.  Well,  I  just  normally  did  not  do  that.  I  would  say 
it  is  possible  that  I  did,  t  do  not  recall,  but  I  just  certainly  don't 
normally  do  that. 

Mr.  Weitz.  Did  they  ask  for— did  they  raise  the  issue  of  any  prior 
commitments  that  had  been  made  by  the  dairy  co-ops  to  the  Republi- 
can Party  or  to  the  Committee  To  Re-Elect? 

Mr.  CoNNALLY.   No. 


6076 
Mr.  Weitz.  Were  you  aware  of  any  such  commitments  at  that  time? 

Mr.  CONNALLY.   No. 

Mr.  Weitz.  Who  arranged  the  meeting? 

Mr.  Conn  ALLY.  I  cannot  be  sure,  but  I  assume  Mr.  Jacobsen  prob- 
ably did. 

Mr.  Weitz.  Did  they  mention  any  contacts  that  had  be«n  made 
between  Mr.  Kalmbach  and   representatives  of  the  dairy  industry? 

Mr.  Conn  ALLY.  No. 

Mr.  Weitz.  And  they  did  not  discuss,  in  any  way,  the  question  of 
whether  they  should  go  forward  or  not  go  forM'ard  on  political  con- 
tributions before  April  7  ? 

Mr.  Connally.  I  do  not  recall  any  discussion  of  contributions. 

Mr.  Weitz.  What  did  Mr.  Mitchell  say  ? 

Mr.  Connally.  I  do  not  recall.  He  took  the  information;  he 
obviously  did  not  know  a  great  deal  alx)ut  it.  I  think  he  grunted  and 
said,  thanks  very  much.  That  was  about  the  extent  of  it. 

Mr.  Weitz.  Well,  he  was  a  former  Attorney  General;  he  was  then 
deeply  involved,  of  course,  in  chairman  of  the  effort  to  reelect  the 
President.  Representatives  of  this  large  dairy  co-op  had  said  an  anti- 
trust suit  would  ha^e  serious  repercussions  on  the  Republican  Party. 
Did  you  either  suggest  or  did  you  take  Mr.  Mitchell  to  believe  that  it 
would  be  prudent  to  take  action  to  try  to  alleviate  that  problem  ? 

Mr.  Connally.  No,  no;  I  did  not.  I  have  been  in  politics  too  long 
to  know  that  you  cannot — when  action  like  that  is  taken,  you  are  going 
to  obviously  offend  somebody,  you  do  the  best  you  can  to  alleviate  the 
political  damage,  but  3^ou  go  on.  There  is  no  way  you  can  do  anything 
-about  it,  and  I  did  not  suggest  to  him  that  we  take  any  action  at  all.  I 
said  1  am  simply  telling  you  what  I've  been  told,  and  you  should  use  it 
for  your  own  guidance. 

Mr.  Weitz.  Well,  what  was  suggested,  or  what  do  you  think  he  con- 
templated with  regard  to  alleviating  the  political  impact? 

Mr.  Connally.  I  have  no  earthly  idea.  I  will  not  speculate  on  what 
he  might  have  done.  If  it  had  been  me,  I  Avould  simply,  if  you  are  asking 
me  what  I  might  have  done,  if  I  were  running  the  campaign,  I  would 
have  probably  contacted  the  head  of  the  campaign  effort  in  each  one  of 
those  States,  and  said  the  Government  has  taken  some  action  here  that 
is  irritating  these  farmers,  we  have  to  try  to  offset  it  with  some  aggres- 
sive work  in  explanation — explain  it  the  best  you  can,  get  out  and  try  to 
tell  them  that  the  Government  action  was  justified  and  certainly  was 
not  an  effort  to  prosecute  them  or  to  treat  them  unkindl3\  but  after  all, 
they  have  a  responsibility  for  upholding  the  law,  and  that  would  of 
been  my  general  approach.  But  I  certainly  have  no  way  of  knowing. 

Mr.  Weitz.  Was  that  in  effect  what  you  told  him  ? 

Mr.  Connally.  No. 

Mr.  Weitz.  Do  you  know  whether  Mr.  Mitchell  told  them  that? 

Mr.  Connally.  No,  I  do  not  know  that  he  met  with  them ;  I  do  not 
know  what  he  did. 

Mr.  Weitz.  You  don't  know  whether  in  fact 

Mr.  Connally.  I  do  not  know  whether  he  even  talked  to  them. 

Mr.  Weitz.  Were  3^ou  aware  of  an  Internal  Revenue  Service  audit 
then  in  progress  of  the  predecessor  of  AMPI,  MPI  for  the  year  1968  ? 

Mr.  Connally.  I  think  that  might  be  the  day  I  learned  about  it  : 
T  am  not  sure. 

Mr.  Weitz.  From  whom  ? 


6077 

Mr.  CoNNALLY.  From  Mr.  Jacobsen, 

Mr.  Weitz.  What  did  they  say  about  it  ? 

Mr.  CoNNALLY.  He,  as  I  recall  when  that  meeting  was  over,  he 
stepped  back  in  for  a  minute — ^it  was  either  there,  and  I  cannot  be 
positive  if  this  was  the  occasion,  but  about  that  period  of  tirae  in  any 
eA^ent — he  said,  he  asked  me.  He  said :  "We  have  some  problems  with 
IRS  dating  back  to  the  Johnson  days.  We  would  like  to  hire  INIarvin 
Collie  to  represent  us;  he  is  the  best  taxman  we  know  of  anywhere 
close  to  us.  We  would  like  to  hire  him  if  you  have  no  objection." 

Mr.  Weitz.  Marvin  Collie  is  who  ? 

Mr.  CoNNALLY.  Marvin  Collie  is  the  head  of  the  tax  department 
of  Vinson,  Elkins,  and  was  one  of  my  partners  prior  to  my  disassocia- 
tion  from  that  firm,  and  that  is  why  he  obviously  asked  me ;  he  said, 
"We  would  like  to  hire  him  if  you  have  no  objection." 

I  said,  "No,  Jake,  I  have  no  objection.  You  hire  whomeA^er  you 
please."  And  that  was  the  extent  of  it. 

Mr.  Weitz.  Did  either  you  or  Mr.  Collie  write  a  letter  to  the  Dis- 
trict Director  of  the  IRS  in  Texas  in  connection  with  this  matter  ? 

Mr.  CoNKALLY.  I  certainly  did  not.  He  might  well  have. 

Mr.  Weitz.  Did  3'ou  discuss  this  matter  with  him  ? 

Mr.  CoNNALLY.  No,  I  did  not. 

Mr.  Weitz.  You  never  discussed  this  matter  with  Mr.  Collie  ? 

Mr.  CoNNALLY.  I  since— I  have  since  then,  yes,  since  this  business 
came  up,  I  asked  him  what  have  Ave,  indeed,  done?  I  remember  the 
conversation  with  Jake  Jacobsen ;  I  said,  "Did  they  employ  you,"  he 
said,  "Yes,"  and  I  said,  "Well,  what  happened  ?" 

He  said,  "Well,  I  spent  a  considerable  time  going  into  it."  I  told 
him  that  I  thought  they  had  no  defense  to  plead  nolo  and  get  it  over 
Avith,  if  that  is  what  they  did,  and  I  said,  "What  did  you  charge 
them  ?"  and  he  said,  "I  charged  them  $3,500." 

Mr.  Weitz.  Now  I  am  not  quite  clear.  When  did  you  discuss  this 
matter  Avith  Mr.  Collie  ?  The  first  time  you  discussed  it  Avith  him  ? 

Mr.  CoNXALLY.  I  discussed  it  Avith  him  this  Aveek. 

Mr.  Eckhardt.  I  am  sure  it  has  been  within  the  last  2  or  3  days. 

Mr.  CoNNALLY.  It  Avas  just  before  we  came  up  here. 

Mr.  Weitz.  Why  did  you  discuss  it  Avith  him  ? 

Mr.  CoNNALLY.  Just  simply  because  I  was  coming  up  here  and  I 
Avanted  to  be  sui-e  that  I  kneAA'  AA^liat  had  happened  because  of  the  con- 
A^ersation  Jake  had  asked  me  about,  saying  they  had  some  problems 
Avith  IRS  and  if  I  had  no  objection  they  AA^anted  to  approacJi  Mr.  Col- 
lie, so  I  later  asked  him  about  it  after  I  got  out  and  after  this  came 
out,  I  asked  him  about  it  and  said,  "Did  they  indeed  employ  you?" 

Mr,  Weitz.  I  am  not  quite  certain  — there  were  a  lot  of  matters  that 
obA'iously  you  could  have  asked  various  people  that  might  be  covered 
in  this  interview.  For  example,  did  you  go  back  to  Mr.  Jacobsen  in  the 
last  fevA'  Aveeks  and  discuss  matters  that  might  come  up  in  this  inter- 
view? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  Why  not  ? 

Mr.  CoNNALLY.  Well,  I  have  not  seen  him. 

Mr.  Weitz.  Did  you  try  to  contact  him  ? 

IMr.  CoNNALLY.  No.  I  Avent  to  Europe  and  I  have  not  contacted  him 
since  I  have  been  back.  And,  responding  to  the  subpena,  Avell  you  asked 
in  the  subpena  for  one  thing,  for  us  to  bring  any  data  that  we  had,  and 


30-337   O  -  74  -  15 


6078 

1  just  wanted  to  be  sure,  and  particularly  this  information  about 
any — let  me  see  what  the  wordino;  is — yeah,  any  investij^ation  or  audit 
conducted  during  lOTl  or  1072  of  the  Internal  Revenue  Service  of 
AMPI  or  MPI. 

iMr,  Weitz.  I  understand.  At  the  same  time,  the  subpena  also  covers 
a  number  of  other  matters  in  Avhich  other  persons  to  whom  you  have 
talked,  for  example.  Dr.  Mehren,  Mr.  Nelson,  and  Mr.  Jacobsen,  by 
3^our  testimony,  were  also  related  to  these  matters.  Did  you  discuss  any 
of  those  matters  with  an}^  of  those  individuals  ? 

Mr.  CoxxALLY.  Xo.  I  have  not  talked  to  Dr.  Mehren,  I  have  not 
talked  to  Mr.  Nelson,  and  T  have  not  talked  to  Mr.  Jacobsen  in  about 

2  weeks. 

Senator  Weicker.  There  is  one  thin*!  I  am  a  little  bit  confused  on 
and  before  we  get  away  f  i-om  the  meeting;  of  March,  with  ]Mehren,  Nel- 
son, and  Jacobsen,  do  I  understand  that  during  the  course  of  this  meet- 
ing that  3'ou  did  or  you  did  not  talk  to  John  Mitchell  ? 

Mr.  CoxxALLY.  Senator,  I  don't  recall.  I  talked  to  John  ^Mitchell 
that  day,  or  the  next  day,  and  I  frankly  do  not  know.  I  cannot  say 
with  certainty  at  what  precise  hour  (^f  the  day  I  talked  to  him.  I  do  not 
know.  When  he  asked  me  if  I  talked  when  they  were  there,  my  response 
was,  I  don't  think  so.  it  would  have  been  unusual  for  me  to  do  it  with 
them  there,  but  it  is  possible  that  T  did  simply  because  T  wa.s  relay- 
ing— merely  relaying — information  to  him.  I  did  not  suggest  any  ac- 
tion or  ask  him  to  do  a  thing.  T  merely  was  advising  him  of  what  I 
thought  was  information  that  he  7*eally  ought  to  have. 

Mr.  Weitz.  But  the  content  of  the  call  to  Mitchell,  regardless  of 
when  it  v.-as  made,  did  relate  to  the  matters  which  were  raised  to  you 
by  these  gentlemen  at  their  meeting? 

Mr.  Coxx^ALLY.  Yes,  that  is  correct.  The  antitrust  aspect  of  it. 

Senator  Weicker.  The  antitrust  aspect  of  it? 

Mr.  CoxxALLY.  Yes. 

Senator  Weicker.  Entered  any  discussion  of  contribution  ? 

Mr.  CoXXALLY.  No. 

Senator  Weicker.  Any  discussion  of  the  IKS  audit  ? 

Mr.  CONXALLY.  No. 

Mr.  Weitz.  Now,  I  am  still  not  quite  certain ;  for  example,  you  were 
calling  not  the  then  current  Attorney  General,  but  the  former  Attor- 
ney General  who  was  chairman — as  I  recall— of  the  Committee  To 
Re-elect;  were  you  not  calling  him  to  discuss  these  matters  and  the  im- 
plications they  might  have  on  the  reelection  effort  and  the  finance 
effort  ? 

Mr.  Cox X ALLY.  No. 

Mr.  Weitz.  "^^Hiat  was  the  purpose  of  your  call  ? 

Mr.  CoxxALLY.  Solely  to  tell  him  what  I  had  been  told. 

Mr.  Weitz.  That  these  people  might  be  offended,  or  irritated  by  the 
antitrust  suit  ? 

Mr.  CoxxALLY.  Right. 

Mr.  Weitz.  And  what  effect  did  that  have  on  the  campaign  ? 

Mr.  CoxxALLY.  The  farmere  that  they  represented  were  obviously 
irritated  and  I  wanted  him  to  know  it. 

Mr.  Weitz.  Well,  who  had  control,  for  example,  or  do  you  know 
who  had  control,  for  example,  of  the  political  funds  of  TAPE? 

Mr.  CoXXALLY.  NOv 


6079 

Mr.  Weitz.  Would  it  be  the  f  armere,  do  you  know,  or  would  it  be  the 
officials  ? 

Mi\  CoNNALLY.  I  do  uot  know.  Now  let  me  be  sure  you  understand. 
I  did  not  discuss  any  political  contributions  with  John  Mitchell  in 
any  way  in  this  conversation. 

Mr.  Weitz.  Did  you  discuss  mattei-s  in  such  a  way  so  that  the  reason- 
able implication  or  understanding  would  be  that  that  would  be  a 
natural  consequence  ? 

Mr.  CONXALLY.  No. 

Mr.  Weitz.  And  you  never  discussed  with  these  gentlemen  at  the 
meeting  with  them  with  Mehren,  Nelson,  and  Jacobsen,  the  possibility 
or  the  likelihood  that  the  GoA-^ernment  would  go  slow  on  the  antitinist 
suit,  or  the  IRS,  or  anything  of  that  nature  ? 

Mr.  CoNNALLY.  No,  sir. 

Mr.  Weitz.  And  you  did  not  discuss  with  them  the  timing,  the  ad- 
visability, of  waiting,  perhaps  until  sometime  later  in  the  year  to  press 
for  higher  price  supports  in  the  milk  ? 

Mr.  CoNNALLY.  No;  as  I  recall,  there  was  no  problem  with  price 
supports  with  milk  and  I  am  not  even  sure  we  discussed  it.  I  guess  we 
did,  but  it  certainly  was  not  a  matter  of  such  importance  that  he  raised 
it  with  me. 

Senator  Weicker.  At  any  time  that  you  talked  to  Jake  Jacobsen, 
not  necessarily  in  the  meeting  that  we're  discussing  now,  but  any  time, 
did  you  indicate  to  him  that  you  had  m.ade  efforts  relative  to  the  price 
support  situation  within  the  White  House  on  their  behalf,  at  any  time 
in  your  discussion  with  Jacobsen,  in  other  words,  did  you  for  lack  of 
a  better  term  take  credit  for  the  fact  that  the  price  supports  had  gone 
up  and  this  was  due  to  conversations  that  you  had  had  with  various 
individuals  in  the  administration  ? 

Mr.  CoNNALLY.  No,  Senator,  I  was  not  that  presumptuous.  The 
conversations — I  had  just  as  many  conversations  about  the  level  of 
price  supports  before  March  the  12th  in  which,  obviously,  I  had  dem- 
onstrated no  influence  as  I  did  after  March  the  12th,  and  I  do  not 
think  my  position  weighed  very  heavily,  very  frankly,  one  way  or  the 
other,  because  I  did  as  much  to  say  that  it  was  a  mistake  to  set  it  at 
81  percent  of  parity  before  March  the  12th,  as  I  did  after  March  the 
12th.  And  between  that  and  the  24'th,  and  I  must  say  to  you  again, 
that  it  certainly  was  not  due  to  any  advocacy  of  mine  that  I  think  the 
parity  was  changed.  I  think  it  was  a  defensive  reaction  to  what  was 
happening  on  the  Hill. 

Senator  Weicker.  All  right,  but  the  only  point  that  I  make  is,  let 
us  assume  that  you  say  it  is  correct  that  it  was  not  an  advocacy  of  yours 
that  resulted  in  the  change  in  supports,  but  did  you  indicate  to  Mr. 
Jacobsen  that  your  advocacy  was  responsible  for  a  change  ? 

Mr.  CoNXALLY,  No,  no;  I  really  have  a  little  more  humility  than 
that.  Senator,  because  I  could  not  in  good  conscience  take  credit  for  it. 

Mr,  Weitz.  In  that  same  vein,  did  you  ever,  for  example,  try  to  im- 
part the  impression  to  or  tell  Mr.  Jacobsen  or  any  of  the  others  of 
AMPI,  that  their  contributions  would  have  that  effect,  if  not  your 
advocacy  ? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  Now,  just  before  we  leave  this  March  16  meeting — you 
may  have  a  copy — but  would  you  look  at  the  log  for  that  day  and  just 
so  that  the  record  is  dear,  does  that  refresh  your  recollection  that  the 


6080 

call  you  made  to  John  Mitchell  to  discuss  this  matter  was,  in  fact,  that 
same  day? 

Mr.  CoNNALLY.  It  may,  or  it  might  not  have  been.  Now,  during  this 
period  it  could  of  been  anything,  this  might  or  might  not  have  been 
the  call,  I  frankly  do  not  know. 

Mr.  Weitz.  Were  you  in  touch  with  Mr.  Mitchell  frequently  durmg 
that  period,  or  as  much  as  once  a  day  ? 

Mr.  CoNNALLY.  No ;  oh  no,  not  once  a  day,  but  I  assume,  and  it  is  a 
rash  assumption  that  that  probably  was  the  time  I  talked  to  him  about 
this  matter,  but  that  may  not  be  correct. 

Mr.  Weitz.  But  it  is  your  recollection  that  that  day,  or  shortly  there- 
after, you  did  call  Mr.  Mitchell  about  this? 

Mr.  Conn  ALLY.  Sometime  in  that  time  frame. 

Mr.  Weitz.  Now  I  would  like  to  move  to  the  period  of  August  1972, 
and  I  think  you  provided  the  committee  witli  certain  documents,  and 
perhaps  we  ought  to  identify  these  and  enter  these  fomnally  on  the 
record. 

[Whereupon,  the  documents  referred  to  were  marked  Connally  ex- 
hibits Nos.  3  and  4  for  identification.^] 

Mr.  Weitz.  And  then  exhibit  No.  4  is  a  letter  dated  August  15, 1972, 
it  is  a  letter  dated  to  you  and  it  was  from  Joseph  J.  Westwater,  vice 
president  of  Dairymen,  Inc. 

Mr.  Connally.  That  is  correct. 

[T^Tiereupon,  the  document  referred  to  was  marked  Connally  ex- 
hibit No.  5  for  identification.^] 

Mr.  Weitz.  And  finally,  exhibit  No.  5  is  a  letter  dated  August  17, 
1972,  dated  to  you  at  the  Madison  Hotel  as  is  exhibit  No.  4  and  that  is 
signed  by  Gary  Hanman,  senior  vice  president  of  Mid-America  Dairy- 
men, Inc.  ? 

Mr.  Connally.  That  is  right. 

Mr.  Weitz.  Now,  the  log  for  August  2  indicates  that  at  9  p.m.  you 
were  scheduled  to  meet  at  the  Madison  Hotel  suite  with  tlie  milk  pro- 
ducers, and  in  particular  it  indicates  Ben  Morgan,  Jr.,  of  Dairymen, 
Inc.,  and  Joe  Westwater  of  Dairymen,  Inc.,  and  then  underneath  that 
is  written  coordinator  of  the  Central  American  Co-op  Federation, 
Gene  Baldi,  B-a-1-d-i,  Mid-America;  Gary  Hanman,  Mid- America; 
and  George  Mehren,  Ass.,  pei-haps  Associated  Milk  Producers,  Inc. 

Now,  do  you  recall  a  meeting  with  those  gentlemen  on  that  day  and 
at  that  time  ? 

Mr.  Connally.  Yes ;  I  do.  I  think  they  were  all  there. 

Mr.  Weitz.  Who  arranged  that  meeting? 

Mr.  Connally.  I  do  not  recall,  I  frankly  do  not  know. 

Mr.  Weitz.  Was  Mr.  Jacobsen  present  at  that  meeting? 

Mr.  Connally.  It  does  not  indicate  that  he  was. 

Mr.  Weitz,  Do  you  racal]  whether  he  was? 

Mr.  Connally.  I  do  not  think  he  Avas. 

Mr.  Weitz.  Had  you  ever  met  any  of  these  gentlemen  before  that  day, 
other  than,  I  sup]:)Ose  you  said  you  had  met  Di-.  Mehren  ? 

Mr.  Connally.  Yes ;  I  had  met  Dr.  Mehren,  I  am  not  sure  I  had. 

Mr.  Weitz.  You  are  not  sure  you  had  wliat  ? 

Mr.  Connally.  Met  the  gentlemen  before. 

Mr.  Weitz.  I  see,  so  if  it  was  not  Dr.  Mehren  who  had  set  up  this 
meeting,  it  would  ha\e had  to  be 

1  See  pp.  6094  and  6095. 

2  See  p.  6099. 


6081 

Mr.  CoNNALi.Y.  It  might  well  have  been  Jake,  I  do  not  know;  it 
might  have  been  Dr.  Mehren,  I  do  not  know. 

Mr.  Weitz.  Was  he  in  the  habit  of  setting  meetings  and  then  not 
attending  those  meetings  with  the  gentlemen  ? 

Mr.  CoNNALLY.  No ;  I  would  say  most  of  the  time  he  would  set  them 
up,  he  would  attend  them — let  me  just  simply  say,  I  do  not  know  and 
I  do  not  want  to  speculate.  The  meeting  occurred,  there  is  no  question 
about  that. 

Mr.  Weitz.  What  was  Mr.  Jacobsen's  function  or  relation  to  the 
Democrats  for  Nixon  at  that  time  ? 

Mr.  CoNNALLY.  Not  any,  really,  he  had  an  office  across  the  street 
and  he  was,  from  time  to  time,  helpful  to  us  in  trying  to  arrange  of- 
fice space  or  trying  to  guide  some  of  our  people  to  get  furniture  and 
things  of  this  type,  but  he  had  no  official  connection  with  the  campaign 
as  svich. 

Mr.  Weitz.  And  what  was  your  official  capacity  at  that  point  in 
connection  with  the  Democrats  for  Nixon  ? 

Mr.  CoNNALLY.  I  think  I  had  the  title  of  chairman. 

Mr.  Weitz.  In  that  position,  normally  would  you  characterize  for 
us,  who  you  would  norma,lly  meet  with  and  for  what  purpose  in  con- 
nection with  ^vour  functions  as  chairman  of  Democrats  for  Nixon '^ 

Mr.  CoNNALLY.  Mr.  Weitz,  I  obviously  would  meet  with  all  types 
of  groups  that  I  thought  could  be  helpful  in  the  campaign,  could  be 
influential  in  the  campaign,  I  met  with — I  traveled  a  great  deal,  I 
made  speeches,  I  met  with  editors,  I  met  with  publishers,  I  met  with 
potential  donors,  I  met  with  anybody  that  was  politically — I  met  with 
Governors,  I  met  with  different  factions  of  parties,  I  met  with  pri- 
marily Democrats  that  I  thought  I  could  entice  into  supporting  the 
President. 

Mr.  Weitz.  Can  3^ou  recall  in  what  category  these  people  would  fall, 
or  for  what  purpose  you  met  them  ? 

Mr.  CoxNALLY.  Now,  this  was  obviously  a  meeting  at  their  request, 
they  came  and  talked  to  me  and  again  about  their  problems  and  they 
talked  about — they  got  into  such  detail  on  them  again — going  back 
to  the  marketing  practices,  where  they  were  complaining  about  the  fact 
that  they  were  doing  a  terriffic  job  for  their  members  who  were  pay- 
mg  their  dues,  as  I  recall,  but  the  nonmembers,  whose  milk  bills  were 
processeci,  were  getting  a  free  ride  to  the  extent  of  about — T  do  not 
know  15  or  18  cents  a  hundredweight  for  the  milk  they  sold,  so  it  is 
the  same  old  argument  that  they  had  in  the  unions  where  the  unions 
take  the  position  that  the  benefits  that  they  derive  from  unionization 
apply  to  everyiwdy  and  they  tliiuk  that  the  nonmembers  ought  to  pay 
the  freight.  This  is  precisely  the  position  that  they  were  taking. 

They  also  talked,  again,  about  the  formula  on  the  pricing  of  cheese 
and  on  butter  and  on  whey  and  it  frankly  got  so  complicated  that  I 
just  said,  "Well  you  all  write  me  a  letter  about  it."  They  were  really 
not  complaining — let  me  put  the  meeting  in  context.  I  said,  "I  do  not 
know  what  I  can  do  about  this*' — all  this — and  they  said,  "We  really  do 
not  want  you  to  do  an^^thins:  about  this,  we  want  you  to  be  informed, 
we  are  getting  on  very  well  with  the  Department  of  Agriculture,  we 
do  not  have  any  real  problems,  but  we  want  to  come  and  see  you  and 
talk  to  you  about  it,"  and  I  said,  "1  hank  you  very  much.'' 


6082 

Mr.  Weitz.  How  long  diti  the  meeting  last,  do  you  recall  approxi- 
mately ? 

Mr.  CoNNALLY.  I  would  guess  45  minutes. 

Mr.  Weitz.  Was  the  purpose  of  the  meeting  for  you  to  meet  with 
them  and  listen  to  their  status  report  of  the  dairy  industry  ? 

Mr.  CoNNALLY.  Yes. 

Mr.  Weitz.  Was  the  purpose  also  perhaps  to  see  Avhether  they  were 
interested  in  making  political  contributions  ? 

Mr.  CoNNALLY.  Not  particularly. 

Mr.  Weitz.  Was  that  one  of  the  purposes  of  the  meeting  ? 

Mr.  CoNNALLY.  Not  really,  not  at  all.  I  was,  at  that  point,  a  little 
skeptical  as  a  matter  of  fact,  when  we  got  the  first  donation  from  the 
political  arm  of  the  group  in  Kentucky.  I  believe  it  came  in  first,  we 
had  a  meeting  in  the  office  to  debate  whether  or  not  we  ought  to  even 
take  it. 

Mr.  Weitz.  Why  was  that  ? 

Mr.  CoNXALLY.  Simply  because  there  was  already  a  great  deal  of 
talk  about  the  milk  producers'  contributions  to  the  campaign  and  there 
wasn't  anything  wrong  with  it,  it  was  i:)erfectly  open  and  above- 
board,  they  have  every  right  to  contribute,  just  as  every  labor  "union 
has  a  right  to  contribute  to  campaigns,  there  was  not  a  thing  wrong 
with  it,  but  again  we  are  trying  to  be  like  Caesar's  wife  as  much  as  we 
could  and  we  finally  said,  "We  have  no  justification  for  not  taking  it, 
let's  take  it." 

So  the  meeting  was  not  for  the  purpose  of  trying  to  get  campaign 
contribution  funds. 

Senator  Weicker.  But,  was  the  subject  of  campaign  contributions 
discussed  ? 

Mr.  CoNNALLY.  Senator,  I  do  not  even  recall  it  being  discussed,  no. 

Senator  Weicker.  It  seems  rather  extraordinary  that  it  was  not  dis- 
cussed. If  I  am  not  mistaken,  at  this  time,  you  were  in  your  official 
function,  your  official  political  function '-; 

Mr.  CoNNALLY.  I  was,  I  certainly  did  not  bring  it  up,  I  was  not  look- 
ing for  contributions  from  them.  I  really  was  not  trying  to  get  one 
here.  We  had  three  different  groups  represented,  these  were  not  the 
people — these  were  the  technicians,  the  fellow  who  did  most  of  the 
talking  was  Westwater  and  he  is  an  economist,  I  believe — let  me  see 
that  letter  from  him,  and. he  is  the  vice  president  of  special  programs — 
I  think  he  is  an  economist.  And  substantially,  the  whole  meeting  was 
talking  about  these  highly  detailed  things  until  frankly  I  got  inun- 
dated with  information  that  I  could  not  quite  assimilate  and  I  finally 
said  to  them,  "Well  look,  you  all  are  getting  over  my  head  with  all 
these  details  I  cannot  remember.  If  you  Avould  be  kind  enough  to  send 
me  a  letter  about  it  and  I  Avill  have  it  here,  and  thank  you  very  much,'^ 
and  that  was  about  it. 

Mr.  Weitz.  Noav,  I  notice  in  the  exhibit  No.  4  from  Mr.  Westwater, 
he  begins  by  saying  "On  August  2d,  Ben  Morgan,  Dave  Parr  and  I, 
from  Dairymen,  Inc..  and  Eugene  Bakli  and  Gary  Ilanman  of  Mid- 
America,  Inc..  met  with  you."' 

Do  you  remember  Dave  Parr's  ptvsence  at  that  meeting? 

Mr.  CoNNALLY.  Yes.  I  do.  I  sure  do.  his  name  is  not  on  the  list,  is  it? 

Mr.  Weitz.  No. 

Mr.  CoNNALLY.  But  he  was  there. 


/ 


6083 

Mr.  Weitz.  Is  it  likely  that  Mr.  Parr  set  up  the  meeting  ? 

Mr.  CoNNALLY.  It  could  be,  it  is  possible,  but  I  do  not  think  so.  I 
do  not  recall  Dave  Parr  ever  settings  up  a  meeting, 

Mr.  Weitz.  Now  you  mentioned,  in  response  to  a  question  a  while 
ago,  that  you  were  in  a  crowd  with  Dave  Parr,  Harold  Nelson,  and 
Bob  Lilly,  that  Dave  Parr  would  be  the  one  you  most  readily  recog- 
nized, when  did  you  first  meet  Dave  Parr  ? 

Mr.  CoNNALLT.  Oh,  5  or  6  years  ago,  but  I  have  seen  him,  very 
frankly,  primarily  on  the  Hill  up  here,  off  and  on  the  last  couple  of 
years,  I  came  up  here  a  very  great  deal  as  you  know  and  in  my  appear- 
ances before  congressional  committees,  I  would  say  Dave  Parr  was 
pretty  active  around  the  Hill.  I  ran  into  him  in  the  halls  and  outside 
of  offices  and  so  forth. 

Mr.  Weitz.  Is  he  essentially  a  lobbyist  ? 

Mr.  CoNNALLY.  I  do  not  know  what  he  is. 

Mr.  Weitz.  Well  he  was  an  agricultural  economist  though  as  Mr. 
Westwater  was  ? 

Mr.  CoNNALLY.  I  do  not  know,  I  do  not  know  that  much  about  his 
background.  One  of  the  reasons  I  would  recognize  him  is  that  he  is 
a  pretty  distinctive  looking  fellow. 

Mr.  Weitz.  And  neither  Mr.  Parr  nor  Mr.  Hanman,  nor  you  or 
anyone  else  in  the  meeting  discussed  political  contributions  ? 

Mr.  CoNNALLY.  I  do  uot  recall  that  we  did,  no. 

Mr.  Weitz.  Do  you  recall  discussing 

Mr.  CoNNALLY.  Let  me — when  you  say  a  political  contribution,  they 
might  have  said,  well  I  see  you  are  in  operation,  we  might  want  to  be 
helpful  to  you — I  might  have  said  well  that  would  be  great,  thank 
you — some  passing 

Mr.  Weitz.  Would  you  have  initiated  that  conversation  ? 

Mr.  CoNNALLY.  No,  I  would — did  not. 

Mr.  Weitz.  Would  you,  for  example,  have  suggested  that — well,  let 
me  start  it  this  way— did  a  party  take  place,  or  some  type  of  reception 
for  the  President  in  late  September  of  1972,  for  which  you  were  respon- 
sible, or  the  sponsor  ? 

Mr.  CoNXALLY.  In  1972  ? 

Mr.  Weitz.  Late  September  1972. 

Mr.  CoNNALLY.  T\niat  kind  of  reception  ? 

Mr.  Weitz.  Some  reception  or  dinner  honoring  the  President? 

Senator  Weicker.  A  fundraising  dinner. 

Mr.  CoNXALi/Y.  Fundraising  ? 

Senator  Weicker.  In  other  words.  Governor,  was  there  a  fundraising 
function  sponsored  by  the  Democrats  for  Nixon  in  September,  which 
function  would  have  been  under  the  auspices  and  direction  of  you? 

Mr.  CoNXALLY.  Not  that  I  am  aware  of.  Tlie  only  one  that  I  am 
aware  of  is  a  reception  that  I  had  at  tlie  rancli  and  it  was  in  that  time 
frame.  I  have  forgotten  the  precise  date,  but  that  was  in  Sei)tcmber. 

Mr.  AVeitz.  Did  the  President  attend  that  ? 

Mr.  Coxx^ALLY.  Oh,  yes,  it  was  for  him. 

Senator  Weicker.  Was  it  a  fundraiser? 

INIr.  CoxxALi.Y.  No.  I  would  not  classify  it  as  a  fundraiser.  We  had 
made  no  attempt  to  raise  funds  at  all.  A  lot  of  the  people  who  were 
there,  indeed,  contributed  and  as  a  matter  of  fact,  I  suppose  nearly 
all  of  them  had — so.  in  that  sense,  it  was  not  a  fundraiser.  We  did  not 


6084 

mention  funds.  T  never  heard  the  word  mentioned.  There  was  no  pitch 
made  for  funds,  there  was  nothing. 

Senator  Weickek.  But  the  makeup  of  the  guests  Avas  that  they  were 
contributors  ? 

Mr.  CoNNALLY.  No,  not  all  of  them  were  contributors  of  money,  no. 

Senator  Weicker.  I  am  just  trying  to  distinguisli,  in  other  words, 
the  fact  that  as  I  understand  there  was  no  charge  for  being  there  ? 

Mr.  Co-NTNALLY.  No,  that's  correct. 

Senator,  let  me  posture  the  dinner  in  terms  of  what  we  were  trying 
to  do  with  it.  The  dinner  was  given  in  the  President's  and  Mrs.  Nixon's 
honor  and  we  invited  Democrats  for  Nixon  from  aroimd  the  country. 
The  purpose  of  it  was  to  simply  say  to  the  Democrats  who  were  coming, 
and  these  whom  we  hoped  we  could  prevail  upon,  to  join  us  in  Demo- 
crats for  Nixon  that  you  are  not  going  to  be  a  stepchild,  that  indeed 
we  want  you.  The  President  wants  your  support.  You  are  not  going  to 
be  completely  unknown.  You  are  going  to  be  treated  like  anybody  else, 
in  effect,  that  is  the  whole  thrust  of  the  meeting. 

So  people  who  were  there  were  not  just  people  who  had  contrib- 
uted money.  We  invited  a  great  many  people.  We  iniated  little  Dave 
Lukens,  who  is  a  little  Jewish  rabbi,  26-year-old,  from  New  York  and 
he  was  there,  of  course,  he  was  working  with  youth  groups.  Mayor — 
the  former  Mayor  John  Collins  was  there,  former  mayor  of  Boston 
who  had  contributed  no  money  to  my  knowledge.  A  great  many  people 
like  this  from  all  over  the  country  were  there,  but  the}'  were  Democrats 
who  had,  in  some  way,  been  instrumental  in  trying  to  help  us  set  up  the 
Democrats  for  Nixon  organization.  It  was  not  a  fundraising  affair. 

Senator  Weicker.  Were  any  of  the  gentlemen  on  that  log  there? 

Mr.  CoNXALLY.  I  think  there  were  a  couple  of  them  there. 

Senator  Weicker.  Do  you  know  whether  any  of  these  individuals 
are  Democrats  or  Republicans,  or  what  have  you  ? 

Mr.  CoNNALLY.  I  think  they  were  all  Democrats,  as  far  as  I  know,  we 
tried  not  to  invite — I  do  not  know,  we  might  have  had  a  Republican  or 
two  there,  I  do  not  know,  but  we  tried  to  make  it  Democrats  and  we 
tried,  frankly,  to  keep  well-known  Republicans  out  of  the  Democrats 
for  Nixon  organization  so  it  would  not  look  like  just  a  cover  of  some 
kind.  We  really  wanted  it  to  be  an  authentic  organization  to  try  to  at- 
tract disenchanted  Democrats  in  support  of  the  President,  but  who 
are  not  prepared  to  go  all  the  way  and  say  I  am  a  Republican,  that  wg-s 
the  thrust  of  it. 

Mr.  Weitz.  Now  at  the  meeting  on  August  2,  would  you  have  men- 
tioned, or  do  you  remember  mentioning  this  reception  and  the  possibil- 
ity that  these  people  might  want  to  contribute  money  and  attend  that 
meeting  and  that  reception  for  the  President  ? 

Mr.  CoNXALLY.  No  invitation  to  that  meeting  was  tied  to  a  con- 
tribution of  one  thin  dime. 

Ml'.  Weitz.  Well,  rather  than  tied  to,  would  you  have  perhaps  men- 
tioned that  a  reception  was  to  be  held  in  late  September  for  supporters 
of  the  President? 

Mr.  CoNNALLY.  No ;  I  do  not  think  I  mentioned  it  to  them. 

Mr.  Weitz,  Now  you  say  that  tliese  two,  and  the  cooperative  was 
repi-esented  by  these  gentlemen,  two  cooperatives,  throusrh  their  poli- 
tical arms,  each  donated  certain  amounts.  I  believe  SPACE  contributed 
$25,000  to  your  recollection,  and  ADEPT  contributed  $6,000? 


6085 

Mr.  GoNXALLY.  Right. 

Mr.  Weitz.  Do  you  know  when  SPACE  made  its  contribution,  its 
$25,000  contribution  ? 

Mr.  CoNNALLY.  No;  but  it  was  very,  very  early,  I  think  it  was  about 
the  middle  of  August. 

Mr.  Weitz.  Could  it  have  been  August  2  ? 

Mr.  CoNNALLY.  No ;  I  do  not  think  it  was  that  early. 

Mr.  Weitz.  Well,  if  the  reports  of  SPACE  to  GAO  indicate  that  it 
made  a  contribution  on  August  2  of  $25,000,  would  that  refresh  your 
recollection  ? 

Mr.  CoNNALLY.  Perhaps  it  was — well  let  us  look  at  the^ 

Mr.  WETFz.^Why  don't  you  provide  the  reports  that  you  have  ? 

Mr.  EcKHARDT.'^  You  have  the  reports  filed  with  GAO  there  and  it 
would  show  the  dates  on  the  reports.  As  far  as  the  Democrats  for  Nixon 
are  concerned. 

Mr.  Weitz.  The  record  should  show  that  the  report  by  Democrats  for 
Nixon  to  GAO,  dated  September  8, 1972,  indicates  on  page — on  sched- 
ule A  that  on  August  10,  1972,  a  contribution  for  $25,000  was  received 
from  the  trust  for  SPACE,  located  in  Louisville,  Ky. 

Mr.  Conn  ALLY.  ^Vliat  was  the  date  again  ? 

Mr.  Weitz.  August  10.  Now  do  the  dates  listed  in  the  report  to  the 
GAO  listed  by  the  Democrats  for  Nixon,  does  that  reflect  the  dates  on 
which  the  checks— the  moneys  were  actually  received  by  the  committee  ? 

Mr.  CoNNALLY.  I  frankly  do  not  know.  I  had  nothing  to  do  with 
keeping  these  records  or  handling  the  money  at  all.  Mr.  Leonard  Marks 
handled  that  entirely.  I  have  no  memory  whatever  about  it.  I  have  no 
knowledge,  I  never  did  know. 

Mr.  Weitz.  And  you  are  not  aware  of  the  date  on  which  the  contribu- 
tion was  actually  sent  or  committed  by  SPACE  ? 

Mr.  CoNNALLY,  No. 

Mr.  Weitz.  Did,  at  that  meeting,  either  organization  through  their 
representatives  actually  make  a  commitment  of  funds  ? 

Mr.  CoNNALLY.  No ;  I  do  not  think  they  did. 

Mr.  Weitz.  They  just  listened  to  you  and  did  not  acknowledge  the 
fact — in  fact  whether  they  would  go  ahead  and  make  some  specijfic 
contribution  ? 

Mr.  CoNNALLY.  What  do  you  mean  "just  listened  to  me"  ? 

Mr.  Weitz.  Well,  you  would — ^all  right,  you  say  you  had  not  raised 
the  matter  of  the  President's  reception  ? 

Mr.  CoNNALLY.  That  is  correct. 

Senator  Weicker.  I  gather  from  the  Governor's  testimony  that  he 
indicated  that  he  was  listening  to  them, 

Mr.  CoNNALLY.  That  is  correct. 

Mr.  Weitz.  Yes ;  the  record  should  show  that. 

And  it  was  only  their  suggestion  that  they  be  anxious  to  help  or  sup- 
port you  that  elicited  some  type  of  favorable  response  ? 

Mr.  CoNNALLY.  I  am_  not  even  sure  they  brought  that  up,  they  might 
have,  I  simply  said  they-  might  have  made  some  passing  reference  to 
it,  but  the  meeting  in  no  way  on  August  the  2d  was  a  meeting  that  dealt 
with  political  contributions. 

Mr.  Weitz.  You  are  certain  of  that  ? 

Mr.  CoNNALLY.  I  am  certain  of  that. 

Mr.  Weitz.  And  any  recollection  to  the  contrary  on  the  part  of  any 
of  those  gentlemen  would  be  faulty,  you  would  think? 


6086 

Mr.  CoNNALLY.  I  would  agrain  simply  say  there  mijs:ht  have  been  a 
passing  reference  to  it.  but  the  purpose  of  the  meetin<r.  as  they  stated, 
was  to  discuss  these  problems  and  they  did  it  in  great  detail  to  the 
point  where  I  said  I  got  inundated  with  information  that  I  did  not 
fully  understand,  and  at  the  conclusion  of  the  meeting,  I  said,  "Gentle- 
men you  have  lost  me,  and  I  think  the  best  thing  to  do  if  you  would 
be  kind  enough  to,  is  to  please  write  me  a  letter  setting  out  these  facts 
and  I  will  have  them." 

Mr.  Wettz.  But  aside  from  passing  reference,  had  they  made  a  spe- 
cific commitment  of  $25,000  from  each  of  the  organizations  ?  That  was 
something  you  would  have  remembered  ? 

Mr.  CoNNALLY.  At  that  meeting  ?  No,  I  do  not  believe  they  did. 

Mr.  Weitz.  So  your  testimony  is  they  did  not  do  so  ? 

Mr.  CoNNALLY.  No ;  we  never  got  $2.5,000  from  each  of  them. 

Mr.  Weitz.  Well,  are  you  aware  that  ADEPT  did  make  contribu- 
tions on  September  19,  as  reported  in  their  GAO  report,  of  $6,000 
to  Democrats  for  Nixon  and  $19,000  additional  to  four  other  State 
Democrats  for  Nixon  ? 

Mr.  CoNXALLY.  No ;  I  was  not  aware  of  that. 

Mr.  Weitz.  And  they  never  mentioned  that  to  yo\i  ? 

Mr.  CoxNALLY.  Until  this  moment. 

Mr.  Weitz.  And  they  never  mentioned  that  to  you  at  that  meeting, 
or  later? 

Mr.  CoNNALLY.  No. 

Mr.  Weitz.  And  Mr.  Jacobsen  never  mentioned  that  to  you  at  that 
meeting  or  later  ? 

Mr.  CoNNALLY.  I  did  not  know  what  was  being  contributed  to 
various  committees  around  the  country.  I  made  no  effort  to  find  out. 

Mr.  Weitz.  In  general,  when  people — for  example,  when  you  discuss 
at  any  time  possible  contributions,  would  you  in  any  wa}'  encourage 
them  to  make  contributions,  either  on  the  one  hand  to  the  National 
Democrats  for  Nixon,  or  on  the  other,  to  the  various  State  Democrats 
for  Nixon  committees  ? 

Mr.  CoNNALLY.  Yes ;  or  frankly,  I  said  if  you  prefer,  make  them  to 
the  Committee  To  Re-Elect.  They  have  all  kinds  of  committees  all  over 
the  countr3\  I  said,  "If  you  want  to,  we're  not  a  fundraising  organiza- 
tion necessarily,  make  it  to  whomever  you  please." 

Mr.  Weitz.  Would  you  at  any  time,  though,  encourage  them  one  way 
or  the  other — in  otlier  words,  would  prefer  if  you  would  make  con- 
tributions to  a  State  committee  as  opposed  to  the  National  Democrats 
for  Nixon? 

Mr.  CoNNALLY.  No ;  I  never  really  tried  to  do  that,  no. 

Mr.  Weitz.  "WHio  would  handle  those  types  of  arrangements,  for 
example,  if  someone  came  to  Leonard  Marks  or  to  you  or  to  anyone 
else  connected  with  the  committee,  and  said,  we  feel  like  we  would 
like  to  make  a  contribution  of  x  dollars,  would  all  of  that  money  neces- 
sarily go  to  Democrats  for  Nixon,  or  might  some  of  the  money,  might 
it  be  suggested  that  some  of  the  money  be  contributed  to  a  State 
committee  ? 

Mr.  CoNNALLY.  I  would  say  I  do  not  frankly  know.  If  they  would 
come  to  me,  I  do  not  know  how  to  respond  to  your  question.  I  would 
saj'  that  Mr.  Marks  would  be  your  best  informant  there,  because  he 
talked  to  these  people,  I  do  not  recall  if  I  ever  encountered  that 
problem. 


6087 

Mr.  Weitz.  Now,  in  general,  looking  as  an  overview  for  1971  and 
1972,  aside  from  the  suggestion  by  Mr.  Jacobsen  in  mid-1971  in  con- 
nection with  the  $10,000  cash,  do  you  recall  any  time  when  you  handled 
or — funds  in  the  amount  of  $5,000  or  more — were  put  at  your  disposal  ? 

Mr.  CoNNALLY.  I  did  not. 

Mr.  Weitz.  Whether  in  cash  or  otherwise  ? 

Mr.  CoNNALLY.  I  did  not,  cash  or  otherwise,  at  any  time. 

Mr.  Weitz.  Did  anyone  under  your  direction,  other  than  Leonard 
Marks,  for  example,  in  the  regular  course  of  Democrats  for  Nixon, 
handle  such  amounts  for  you  ? 

Mr.  CoNNALLY.  No;  not  to  my  knowledge,  no. 

Mr.  Weitz.  And  Mr.  Jacobsen  ? 

Mr.  CoNXALLY.  Not  to  my  knowledge,  no,  no  one. 

Mr.  Weitz.  I  have  no  further  questions. 

Senator  Weicker.  I  have  just  one  question  on  this  particular  subject. 
Have  you  ever  met  with  David  Wilson  of  the  Wliite  House  staff  rela- 
tive to  the  suit  brought  by  Ralph  Nader  on  this  matter? 

Mr.  CoNNALLY.  No ;  I  have  not,  I  do  not  believe  I  laiow  him,  Sena- 
tor. I've  certainly  never  met  with  him. 

Senator  Wfjcker.  Do  other  counsel  have  any  questions  ? 

Mr.  Sanders.  Yes,  sir,  I  have  a  few  things. 

The  Reporter.  Your  name,  again,  please. 

Mr.  Sanders.  Sanders,  S-a-n-d-e-r-s. 

Grovernor  Connally,  did  you,  at  any  time  in  Feibniary  or  March  1970 
or  1971,  discuss  the  milk  support  problem  with  Chairman  Mills, 
Wilbur  Mills? 

Mr.  Connally.  Yes. 

Mr.  Sanders.  Did  you  do  this  in  connection  with  testimony  before  a 
House  committee  or  was  this  a  private  meeting  you  had  with  him? 

Mr.  CoNNALLY.  I  do  not  recall,  Mr.  Sanders.  I  rather  think  we  dis- 
cussed it  several  times. 

Mr.  Sanders.  Did  you  have  meetings  with  him  for  the  particular 
purpose  of  discussing  the  milk  price  support  ? 

Mr.  CoNNALLY.  I  do  not  recall  that  we  did.  I  met  with  him  fre- 
quently, because  I  was  up  there  frequently,  but  I  do  not  recall  that 
we  had  any  meetings  for  that  purpose. 

Mr.  Sanders.  Did  you  have  similar  discussions  with  Chairman 
Poage  ? 

Mr.  CoNNALLY.  T  cannot  be  sure.  I  got  a  telephone  call  from  him,  but 
I  do  not  think  I  had — I  do  not  think  I  had  any  meeting  with  him. 

Mr.  Sanders.  My  understanding  is  that  the  legislation  that  was 
introduced  in  the  House  was  referred  to  the  Agriculture  Committee. 

Mr.  CoNNALLY.  I  think  that  is  right. 

Mr.  Sanders.  Why  would  your  discussions  have  been  with  Chairman 
Mills  as  opposed  to  someone  on  the  Agriculture  Committee  ? 

Mr.  CoNNALLY.  Oh,  Mr.  Sanders,  I  testified  earlier,  I  talked  to  a 
great  many — or  a  great  many  Members  of  Congress  talked  to  me  about 
this  matter.  It  was  not  something — and  both  sides  of  the  aisle  in  both 
Houses — both  House  and  Senate,  so  I  thought  it  not  a  bit  unusual  and  I 
must  say  they  Avere  amazed,  those  with  whom  I  talked,  that  the  admin- 
istration would  indeed  set  the  parity — set  the  support  price  at  81  per- 
cent of  parit}^  and  they  thought  it  was  extremely  foolish  and  that  they 
Mere  in  effect  saying  they  were  going  to  set  it  themselves. 


6088 

INIr.  Saxders.  Do  3^011  have  aii}^  recollection  of  any  discussions  con- 
cerning this  matter  with  Chairman  Mills  between  Mai-ch  12  and 
March  25  ? 

Mr.  CoNXALLY.  I  do  not  Avant  to  try  to  tie  the  time  down,  that  spe- 
cifically, I  do  not  remember  that  precisely.  I  do  remember  that  I 
talked  to  him  on  several  occasions  about  it. 

Mr.  Sanders.  Do  3'ou  have  a  recollection  of  any  conversations  in  the 
context  of  the  administration  decision  already  being  made  and  your 
desire  to  or  your  thoughts  about  overcoming  this — about  the  potential 
legislation  ? 

Mr.  CoNNALLY.  "Well,  I  do  not  want  to  try  to  define  the  conversa- 
tions that  precisely  because  I  do  not  remember  them  that  jirecisely.  I 
do  know  tliat  there  was  a  great  deal  of  interest  on  the  Hill.  I  do  know 
that  Chairman  Mills  talked  to  me  about  it  several  times,  as  did  a 
number  of  other  Members  of  Congress,  and  I  am  sure  a  number  of 
those  convei"sations  were  between  INIarch  12  and  March  25th. 

Mr.  Saxders.  Do  you  have  any  recollection  of  any  discussion  con- 
cerning this  subject  in  March  1971  with  President  Johnson? 

Mr.  Coxxally.  No,  I  do  not. 

]Mr.  Saxders.  Do  you  have  any  knowledge  as  to  whether  President 
Johnson  made  any  effort  to  persuade  Democratic  Congressmen  to  go 
to  bat  for  the  increased  parity? 

Mr.  Coxxally.  I  do  not  know. 

Mr.  Saxders.  Do  you  have  any  knowledge  as  to  whether  any  officials 
of  AMPI  were  in  contact  with  President  Johnson  in  March  1971  ? 

Mr.  Coxxally.  No.  I  would  have  no  way  of  knowing  that. 

Mr.  Saxders.  Do  you  have  any  knoAvledge  of  any  AMPI  funds  being 
committed  to  Congressman  Mills? 

Mr.  Coxxally.  No — other  than  the  published  reports,  but  that  is  all. 

Mr.  Saxders.  That  would  be  TAPE  ? 

Mr.  CoNNALLY.  I  do  not  even  i-emember  who  it  was. 

Mr.  Sanders.  Well,  my  question  related  to  commitments.  Do  you 
have  any  knowledge  of  any  AMPI  funds  being  paid  to  Congressman 
Mills? 

Mr.  Coxxally.  The  only  thing  I  know,  it  seems  to  me  I  read  in 
either  the  report  of  the  filings,  but  in  any  event,  I  read  soinething  in 
the  newspaper  about  funds  that  had  been  contributed  by  one  of  the 
organizations  to  Chaii'man  ]\fills. 

ISIr.  Sanders.  In  any  of  your  conversations  with  Chairman 
Mills  concerning  the  milk  problem,  did  you  discuss  with  him  the 
availability  of  AMPI  funds? 

Mr.  Conn  ALLY.  No. 

Mr.  Sanders.  Do  you  have  any  knowledge  of  a  commitment  of  any 
AMPI  funds  to  President  Johnson  ? 

Mr.  Coxxally.  During  this  time  period  ? 

Mr.  Saxders.  Yes.  sir.  in  1971. 

Mr.   COXNALLY.   No. 

Mr.  Sanders.  Or  to  anyone  on  behalf  of  or  for  the  use  of  President 
Johnson  ? 

Mr.  Conn  ALLY.  No. 

Mr.  Sanders.  No  further  questions. 

Senator  AYeicker.  Are  there  any  further  questions  on  this  matter? 

Mr.  Edmisten.  Let  me  ask  a  question. 

It  seems  as  though  the  various  milk  groups  sort  of  singled  you  out. 


I 


6089 

To  what  do  you  attribute  that — to  comfort  their  woes  and  troubles? 

Mr.  CoNNALLY.  I  certainly  would  not  characterize  myself  thusly.  I 
think  I  had  meetings  with  one  of  their  representatives  in  1971.  I  had 
one  meeting  which  I  have  already  described  in  March  1972.  I  had  an- 
other meeting  in  August  1972.  Those  were  three  m.eetings  that  I  have 
had  in  2  full  years.  They  were  all  over  this  town  like  locust  in  1971,  if 
I  remember  correctly,  and  I  do  not  think  they  singled  me  out  at  alL  I 
think  you  go  to  anybody  in  town  and  find  that  they  had  received  about 
as  much  attention  or  more  than  I  had. 

Senator  Weicker.  During  the  year  1973,  Governoi",  have  you  dis- 
cussed this  matter  with — and  when  I  say  this  matter,  rather  the  events 
that  transpired  as  you  knew  them  or  the  publicity  that  has  been  given 
to  this  business — with  the  President  of  the  United  States. 

Mr.  CoNNALLY.  No,  Senator,  T  do  not  believe  I  have. 

Senator  Weicker.  With  any  personnel  of  the  White  House  ? 

Mr.  CONNALLY.  No. 

Senator  Weicker.  During  1973  ? 

Mr.  Connajlly.  No,  I  do  not  believe  I  have. 

Senator  Weicker.  I  have  one  question  while  you  aie  before  the 
committee.  T  know  you  have  been  very  patient  and  very  responsive, 
sir,  ill  your  questioning  by  the  committee.  Wliile  you  are  here,  there 
is  one  question  T  would  like  to  relate  to  you  on  another  matter. 

During  the  course  of  the  summer,  certain  memorandums  were 
handed  over  to  the  committee  which  contained  public  knowledge,  one 
of  which  was  a  memorandum  from  Mr.  Charles  Colson  to  H-  K.  Halde- 
man  relative  to  the  ITT  matter,  and  it  was  given  to  the  Watergate 
Committee,  and  it  appeared  in  the  press.  In  the  course  of  that  men^- 
orandum,  the  following  statement  was  made : 

Certain  ITT  files  which  were  not  shredded  and  were  turned  over  to  the  SEC — 
it  was  talked  yesterday  in  the  Committee  of  subpoenaing  these  from  IT&T— 
these  files  would  undermine  Grinell  testimony  that  he  made,  that  he  made  the 
decision  not  to  take  the  appeal  to  the  Supreme  Court.  The  correspondence  to 
Connaliy  and  Peterson  credited  the  dalay  in  Justice's  filing  of  the  appeal  to  the 
Supreme  Court  in  the  Grinell  case  to  indirect  intervention  by  Peterson  and 
Connaliy.  And  they  are  referring  to  a  letter  that  was  sent  to  you  on  April  22, 
1971  by  Phil  Meyer. 

And  I  wonder  if  you  might  take  this  occasion  to  comment  upon 
that  reference  to  you  in  the  memorandum  ? 

Mr.  CoNNALLY.  Senator,  I  am  grateful  for  the  opportunity  to  do  so, 
because  in  spite  of  the  reference  in  there  as  crediting  Pete  Peterson 
and  me  with  it,  I  had  nothing  whatever  to  do  with  it.  It  was  a  gratui- 
tous thanks,  which  w^as  richly  undeserved..  And  I  cannot  speak  for 
-Mr.  Peterson,  obviously,  but  as  far  as  I  am.  concerned,  I  took  no  part 
in  the  ITT  matter  as  suggested  in  that  matter. 

Senator  Weicker.  Do  you  know  the  letter  that  I  am  referring  to  ? 

I  have  a  copy  here, 
great  many — or  a  great  many  Members  of  Congress  talked  to  me  about 
the  16th,  April  22.  Yes.  I  am  now  familiar  with  the  letter.  Frankly, 
I  do  not  even  recall  that  I  saw  the  letter  when  it  cam^e  in. 

T  had  a  meeting  with  these  gentlemen,  and  I  assume  it  was  on  this 
Friday,  April  16,  that  I  saw  Mr.  Geneen  and  Dr.  Mehren.  They  talked 
to  me  about  some  of  their  problems  for  approximately  30  minutes. 
I  listened — I  thought  very  patiently — to  their  problems.  I  tried,  and 
did  to  a  certain  extent,  steer  the  conversation  into  other  channels,  be- 


6090 

cause  obviously  the  matter  was  not  one  under  my  jurisdiction,  one 
under  which  I  would  have  no  control,  and  one  under  which  I  did  not 
intend  to  take  any  part. 

I  tried  to  direct  the  conversation  to  the  area  of  administrative 
hurdles,  administrative  barriers,  obstacles  that  are  placed  in  the  way 
of  American  businessmen  by  foi-eip;n  governments  Avhen  they  attempt 
to  do  business  in  those  countries,  because  we  are  getting;  deeply  in- 
volved in  international  trade,  international  monetary  affairs.  We  are 
lookinp:  at  a  bad  balance  of  payments,  a  bad  balance  of  trade,  and  it 
was  my  responsibility  at  that  point  to  take  a  look  at  this  entire  field. 
I  knew  he  operated  extensively  overseas.  I  tried  to  direct  the  conver- 
sation in  that  area. 

The  only  thing  I  remember  of  any  significance  out  of  the  meeting 
was  the  f  a-^t  that  he  told  me  that  ITT,  in  their  international  operations, 
made  a  net  $300  million  a  year,  or  attributed  a  net  $300  million  a  year 
to  our  favorable  trade  balances.  Now,  beyond  that,  T  had  no  part  what- 
soever in  the  rest  of  this. 

Senator  Weicker.  In  other  words,  you  were  not  in  contact  with  any- 
body at  the  Justice  Department  ? 

]\ir.  CONNALLY.  No. 

Senator  Weicker.  As  a  result  of  this  meeting? 

Mr.  Conn  ALLY.  No. 

Senator  Weicker.  Did  you  ever  discuss  it  with  the  President? 

Mr.  Conn  ALLY.  No. 

Mr.  Sanders.  I  have  one  more. 

Senator  Weicker.  Yes.  please  go  ahead. 

Mr.  Sanders.  Governor  Connally,  do  you  have  any  knowledge  of  a 
meeting  between  Dr.  Mehren  and  President  Johnson  in  October  1P72  ? 

Mr.  Connally.  No. 

Senator  Weicker.  I  have  no  further. 

Is  there  anything  further.  Governor,  that  you  would  care  to  go  ahead 
and  say? 

]\Ir.  Connally.  Senator.  I  believe  not.  I  am  grateful  for  the  oppor- 
tunity to  be  here,  to  hopefully  clarify  the  role  that  I  played  in  these 
matters  that  are  receiving  the  attention  of  the  committee.  We  would 
be  delighted  to  supply  you  Avith  any  additional  information  that  you 
have  asked  for. 

I  know  that  this  is  an  executive  session.  Senator,  but  the  press  is 
rather  larjre,  I  think,  and  assembled  over  in  the  press  room.  I  assume, 
without  objections  on  your  part,  or  I  would  like  to,  without  objection 
on  your  part,  go  over  and  at  least  touch  the  high  spots  of  my  testi- 
money  in  response  to  their  questions. 

I  do  not  want  to  volunteer  anything  to  them,  but  they  are  there. 
They  have  been  there.  They  were  there  when  I  came  in.  I  do  not  know 

how  to  avoid  it.  And  unless  there  are  serious  objections 

SenatoT-  Weicker.  Theie  is  no  objection  as  far  as  the  Chair  is  con- 
cei-ned.  excent  insofar  as  the  information  that  has  been  given  at  this 
meetiufr.  as  it  i-elates  to  the  vai'ious  staff  members.  Obviously,  we  will 
go  by  the  i-egular  rides  of  the  committee,  which  is,  this  is  an  executive 
session,  and  they  Avill  not  be  made  available  to  the  press. 


6091 

And  I  ceilainly  appreciate  your  notifying  us. 

Mr.  CoNNALLY.  I  do  not  want  to  do  it,  but  I  think  I  ought  not  to 
walk  out  of  here  in  a  veil  of  secrecy  and  not  respond  to  their  questions 
at  all.  I  will  do  it  in  the  absolute  minimum. 

I  would  be  delighted  for  any  of  your  stajff  to  go  and  listen  to  it  if 
they  would  like. 

Senator  Weicker.  Thank  you  very  much  for  your  patience.  I  ap- 
preciate it. 

[Whereupon,  at  7:35  p.m.,  the  hearing  in  the  above-entitled  matter 
adjourned.] 


6092 


CoNNALLY  Exhibit  No.  1 


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6094 

CONNALLY  EXfflBIT  NO.  3 


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6095 


CoNNALLY  Exhibit  No.  4 


Dairymen,  Inc. 

SUITE  NO.   506,   PORTLAND  FEDERAL  BUILDING 

200  WEST  BROADWAY,   LOUISVILLE,   KENTUCKY  40202 


CENTRAL   OFFICE 
PHONE  (502)  584-8123 


August  15,  1972 


The  Honorcible  John  Connally^ 
Madison  Hotel,  Room  203 
:15th  and  M  Streets,  N.W. 
Washington.D.C.  20005 

rOear  Mr.  ■  Connal  ly ;         ■  _:. 

On  August  2,- Ben  Morgan,  Dave  Parr  and  i.from  Dairymen,  , 
Inc.  and  Eugene  Baldi  and  Gary  Hanman  of  Mid-America  Dairymen,',- 
Inc.  met  with  you  to  discuss  needed  changes  in  federal  programs  ; 
relating  to  milk  marketing.  You  suggested  we  write  to  you 
summarizing  the  needed  changes  and  why  these  changes  are  necessary. 

There  are  two  vitally  needed  changes.  The  first  of  these 
is  the  amending  of  Federal  orders  to  expand  the  use  of  marketing, 
service  payments  to  include  additional  activities  which  are  per- 
formed by  producer  groups  and  which  benefit  all  producers.  The 
second  needed  change  is  the  adjusting  of  the  milk  price  support 
level  to  the  market  level  which  will  prevail  during  October  and 
November  of  this  year. 

This  letter  is  concerned  with  the  first  of  these  vital 
chdnges--namely  marketing  service  payments.  Mid-America  Dairymen, 
Inc.  will  send  a  second  letter  concerning  the  needed  adjustment 
in  the  price  support  level. 


MARKETING  SERVICE  PAYMENTS 


Background.  Marketing  service, payments  have  long  been  used 
in  the  Federal  milk  order  regulatory  process  to  reimburse  cooperatives 
for  verification  of  producer  v;eights.,  samples,  and  butterfat  tests, 
and  for  providing  market  information.  These  provisions  were  incor- 
porated into  Federal  Orders  at  a  time  when  the  above  enumerated  ecti-  -g 
vities  were  practically  all  of  the  activities  in  which  cooperatives 


6096 


The  Honorable  John  Connally 
August  15,   1972 
Page  Two 


were  engaged.     Extension  of  the  payment  for  ttiarketing  services  to 
encompass  all  services  with  market-wide  benefits  and  performed  by 
modern-day  cooperatives  is  essential  to  fully  achieve  the  objectives 
of  the  Agricultural  Marketing  Agreement  Act,  as  amended.  ~ 

In  recent  months,  representatives  from  Dairymen,  Inc.  have  met 
with  the  United  States  Department  of  Agriculture  to  discuss  the  expan- 
sion of  marketing  service  payments .     The  reaction  has  been  encouraging 
and  we  will  meet  again  in  coming  weeks. 


.  '  Some -Karket-Wide  Services  Performed  by  Dal^yrnen,  Inci  Which  --  '/^y-s 
Benefit  all  Producer-Members  and  Non -Members  Alike.  Because  consumers  ■*.;■'<, 
demand  more  milk,  from- stores  on  Thursday,  Friday  and  Saturday  than  on  - 

other,  days  ;^'many'  processors  have  cut  back  to  bottling  four  or. five  days  '.- 
during  the -  week ,    However,  cows  continue  to  produce  milk  seven  days  ? 
week.     Milk  supply  also  varies  seasonally.     Therefore,  Dairymen,  inc. 
and  other  producer  groups ,  have  the  responsibility  of  balancing  supply 
with  the  demand  of  an  entire  market.    That  is.  Dairymen,  Inc.,  and  these 
other  cooperatives,  guarantee  all   the  milk  needed  in  a  particular  market 
and  when  milk  supplies  are  not  available  locally,  it  is  brought  into  the 
market  from  distant  areas.-  This  encompasses  sizable  investments  in  milk 
storage  or  reload  facilities  in  addition  to  expensive  transportation 
equipment.    ■      . 

.   In.  addition,  members  of  DairyTnen,   Inc.   invest  one  percent  of  the 
gross  rev«nue-,-,receTved  from  the  sale  of  their  milk  in  milk  promotion 
and  adyertistng  to  expand  the  market  for  milk  and  da^ry  products.; 

'^'    .:''  J:?i^p^&1iaiiryfaQi^,  Inc-  has  fceen  respoRSibls  for  making  ext^sive 
maT^ctrt^^atysi^s,  proposing  changes,  requesting  hearings  and  preparing 
"testiaKw'jf^HalT  Qf  which  *ct1v1ties  are  necessary  in  the  federal ^railk 
enter  regulatory  program.  ^V 

■'  '=-  these  above  enumerated  activities  and  some  others  have  the  effect 
of  raisitrg -'prices  paid  to  producers  in  a  particular  markst  abovewhat  they 
would  otherwise  be.     Dairymen,  Inc.,  and  other  producer  groups,  are  bearing 
the  entire  cost  for  these  activities.     However,  non-member  producers 
receive  the  benefits  of  these  activities  without  paying  an  equitable  share 
of  their  cost. 


Impact  on  Consumers  and  Milk  Dealers.     Expansion  of  marketing 
service  payments   to  include  additional   services  provided  by  some  Pfc- ^ 
ducer  organizations  v/ould  not  result  in  an  increase   in  the- price  consumers 
pay  for  milk.     The  purpose  of  our  proposal   is  to  allocate  cost  of  services 
provided  among  all   those  who  receive  benefits. 


6097 


The  Honorable  John  Connally 
August  15,  1972 
Page  Three 


Dairymen,  Inc.  and  other  similar  producer  groups  assume  the 
major  responsibility  and  all  the  risks  for  performing  functions 
necessary  to  efficiently  service  the  markets  it  supplies  with  milk. 
The  most  efficient  means  to  provide  these  market-wide  functions  is 
through  a  highly  interrelated  system  of  plants,  equipment  and 
personnel.  Such  an  organization,  as  Dairymen,  Inc.,  increases 
efficiency  which  has  the  effect  of  enhancing  the  income  of  all  pro- 
ducers in  a  market  and  decreasing  the  cost  of  milk  to  milk  processors 
and  consumers. 


Impact  on  Producers.  Currently,  non-member  producers  are  ' 
paying  5  to  6  cents  per  hundredweight  for  butterfat  testing  and 
market  information  under  marketing  service  provisions  now  in  Federal 
Orders.  Members  of  Dairymen,  Inc.,  and  other  similarly  organized 
cooperatives,  are  paying  approximately  25  cents  per  hundredweight 
to  serve  the  total  needs  of  the  milk  market.  We  estimate  that 
marketing  service  payments  that  we  propose  would  vary  from  18  to 
25  cents  per  hundredweight  depending  on  the  services  performed  in 
respective  federal  markets,  which  would  be  paid  by  all  producers-- 
both  members  and  non-members.  We  believe  we  can  show  at  a  public 
hearing  that  non-member  producers  are  gaining  more  than  18  to  25 
cents  per  hundredweight  through  market-wide  service  activities  of 
Dairymen,  Inc. 


Impact  on  Government  Costs.  There  will  be  no  significant 
increase  in  government  program  costs  associated  with  the  proposed 
expansion  of  marketing  service  payments  since  the  expansion  would 
have  no  effect  on  milk  production  or  purchases  of  dairy  products 
by  the  Government  under  the  price  support  program. 


Recommended  Procedure.  The  Southeast  is  a  relatively  homogenous 
milk  marketing  area.  We  recommend  that  the  U.  S.  Department  of 
Agriculture  call  a  public  hearing  to  consider  expanding  the  use 
of  marketing  service  payments  in  the  federal  orders  which  are  now  opera- 
ting in  the  southeastern  states  within  which  Dairymen,  Inc.  operates.  If 
Dairymen,  Inc.,  on  the  basis  of  its  testimony  at  the  public  hearing. 


6098 


The  Honorable  John  Connally 
August  15,  1972 
Page  Four 


persuades  the  Department  of  Agriculture  that  the  expansion  of 
marketing  service  payments  is  in  the  interest  of  dairy  farmers 
end  the  public,  then  it  can  call  hearings  to  consider  similar 
changes  in  federal  orders  in  other  parts  of  the  country.      "'.. 

'.    If  we  c.?ri  provide  any  additional  information,,  please   '- 

1  et  me  know ,  -. -    ,      ; '  '  ■  '       •  - 

Sincerely  yours,-   ■_, 
('"x    /  [\ 'J]l. -4'"  4-~ 

(.^Joseph  J.  Westwater  "  .   '^" 
f::^:  Vice-President    .-• 

{-:'■  Special  Programs   - 

JJW:jh  -^y-S^K-r^r'         ' 


6099 

CONNALLY  EXfflBIT  NO.  5 
MID ->qMERIC/5     O/qiRVMEN,   II^JC 


1337    s      s      SIATIOTn  •  SPWINGFIELD     MISSOURI     65805  •  AREA     CODE    417    e62-7C 

August  17,    1972 


The  Honorable  John  Connally 

MadisoQ  Hotel 

Room  203 

15th  St  M  Streets,    N.  W. 

Washington,    D.    C_  20005 

Dear  Secretary  Connally. 

This  is  a  follow-up  to  our  discussion  earlier  this  month  relative 
to  the  need  for  governmental  assistance  as  the  dairy  industry  attempts  to  re- 
structure itself  for  the  increased  demand  for  cheese.  ,  ' 

Historically,    the  Commodity  Credit  Corporation  has  purchased 
butter,    powdered  milk  and  cheese  as  a  means  of  supporting  milk  prices. 
These  products  have  two  important  attributes  that  make  them  desirable  as    ' 
price  support  products.     First,    they  represent  the  end-use  of  milk  that  cannot 
be  used  in  some  higher  value  product  and,    secondly,    they  are  storable  for 
substantial  periods  of  time. 

"f-^'  '  1    ■•■,       \  .    ^  .   ' 

To  understand  the  mechanics  of  establishing  the  prices  at  which 
commodities  are  purchased,    it  is  necessary  to  briefly  discuss  the  yields  that 
can  be  expected  from  processing  milk  into  various  products.      Basically, 
100  pounds  of  milk  contains   enough  butterfat  and  solids   not  fat  to  make  about 
4-1/2  pounds   of  butter  and  about  8.  1  pounds  of  powdered  milk  OR   10.  1  pounds 
of  cheese  together  with  a  small  amount  of  whey  by-products.      By  establishing 
prices  for  these  commodities  and  providing  a  processing  allowance,   S-  target 
value  of  100  pounds  of  milk  can  be  established.      The  following  is  an  example  of 
the  technique  used  to  compute  support  prices  as  they  were  set  ou  April  1,    1971: 

lOOnf  Milk  Made  into  Cheese 


Cheese  price  54.7?'  per  pound 

X   10.  1  pounds  cheese  $  5.52 

Add  value  of  whey  .  18 

Cross  value  of  cheese  and  whey  $  5.  70 

Less  cost  ol  manufacturing  .  77 


Support  Price  Level  $4.93 


6100 


Page  n 

The  Honorable  John  Connaliy  August  17,    1972 


100"  Milk  Made  into  Butter  and  Powder 


Butter  price  67.  78?  per  pound 

X  4.  48#  butter  $  3.  04 

Powder  price  31.  Si  per  pound 

X  3.  13#  powder  2.  56 

Gross  value  of  butter  and  powder  $  5.  fcO 

Less  cost  of  manufacturing  .  67 

Support  Price  $  4.  93  -  ':  ' 

It  should  be  noted  that  the  formula  for  establishing  the  price  for 
cheese  is  somewhat  mere  favorable  than  the  butter -powder  formula,    represent- 
ing an  attempt  to  encourage  the  development  of  cheese  processing  facilities. 
Certainly  no  one  can  question  the  desirability  of  this  attempt,    since  the  dorriestic 
demand  for  cheese  has  absorbed  an  increase  of  about  18%  during  the  past  3  years. 
Also,    cheese  is  a  more  desirable  product  for  distribution  and  use  in  the  school 
lunch  program  and  other  relief  feeding  programs  that  utilize  surplus  commodities 
from  the  Commodity  Credit  Corporation. 

The  problem  confronting  the  industry  at  the  present  time  is  the 
disparity  in  returns  for  plants  that  manufacture  butter  and  powder,    and  those 
that  make  cheese.       With  cheese  markets  at  58?  per  pound,    these  operators 
have  an  ability  to  out-pay  butter-powder  plants   (primarily  coops)  by  about 
30?  per  hundredweight. 

About  75%  of  the  butter-powder  processing  plants   in  the  United 
States  are  owned  and  operated  by  cooperative  associations,    thus  dairy  farmers, 
or  at  least  a  part  of  the  nation's  dairy  farmers,    are,    in  effect,    carrying  this 
burden  of  an  unfavorable  price  relationship  with  little  opportunity  to  recover 
their  losses   in  the  short  run. 

There  are  indications  that  cheese  prices  will  continue  to  strengthen 
and  this   in  turn  will  allow  cheese  processors  to  further  increase  prices  and 

widen  the  disparity  with  operators   of  butter -powder  plants. 

Cooperatives  have"been  systematically  converting  butter-powder 
operations   to  the  production  of  cheese  as  the  domestic  demand  indicates  a 
continuing  need  for  cheese  and  as  capital  is  available.     The  cost  squeeze  re- 
flected in  the  current  situation  actually  is  reducing  the  funds  available  to     < 
cooperative  associations  for  continuing  the  conversion  of  butter-powder  plants 
to  cheese  processing,    thus  slowing  a  desirable  trend. 


6101 


Page  #3 

The  Honorable  John  Connally 


August   17.    1972 


To  coiTect  the  present  inequity  and  provide  improved  income  to 
dairy  farmers,    we  suggest  the  following  action: 

1.     Bring  the  present  price  support  level  to  the  competitive 
price  level  currently  being  paid  milk  producers.      This  can  be  done  hy  in- 
creasing the  price  at  which  the  Commodity  Credit  Corporation  will  purchase 
powdered  milk  by  about  3^  per  pound  and  moving  the  price  support  floor  on 
cheese  and  butter  to  present  market  price  levels.      This  would  allow  cooperative 
associations  and  others  operating  butter-powder  plants  to  pay  competitive 
prices  and  thus  continue  the  program  of  converting  butter-powder  plants  to 
cheese  processing  facilities.     It  is  important  to  note  that  this  action  ■would 
not  increase  the- price  of  cheese  or  butter  since  these  items  are  already 
reflective  of  present  milk  price  levels;     thus,    consumers  should  experience 
little  if  anyincrease'-in  dairy  product  prices.  -.;■ 

j  2.     We  suggest  the  Secretary  review^  monthly  the  competitive  ■•" 

prices  paid  for  manufacturing  milk  and  make  similar  adjustments  if  there 
are  again  competitive- increases  in  price  levels.      We  again  suggest,  that  such 
increases  be  made  only  in  the  powdered  milk  price  and  thus  allow  prices  on 
consumer  products'such  as  butter  and  cheese  to  be  established  at  competitive  .- 
levels.  ,  ,  .  ,  "  -' 


CU-bS.-. 


Very  truly  yours, 
MID-AMERICA  DAIRYMEN,    INC. 


//Hi 


Gary/Hanman 

Senior  Executive  Vice  President 


6102 


AFFIDAVIT 


I,  John  B.  Connally,  being  first  duly  sworn  according  to 
law,  depose  and  say  that  the  answers  to  the  questions  set  forth 
below  are  true  to  the  best  of  my  recollection,  Information  and 
belief. 

Q.    Now  during  March  1971,  do  you  recall  meeting  Mr.  Lilly  at 
Page  Airways  in  Washington,  in  the  Washington  Airport? 

A.    No,  I  do  not. 

Q.    You  do  not  remember  any  trip  out  of  Washington  during 
March  1971? 

A.    After  a  review  of  my  records,  I  do  remember  a  trip  on 
March  5>  Friday  afternoon,  when  my  wife  and  I  left 
Washington  from  Page  Airways  by  private  plane  to  New 
York  City  and  returned  to  Page  Airways  mid-afternoon, 
Sunday,  March  7-   Also,  during  the  weekend  of  March  20 
and  21,  my  wife  and  I  visited  at  a  farm,  near  Washington, 
with  personal  friends;  we  made  this  trip  by  automobile. 

Q.    Now  you  do  not  recall  seeing  Mr.  Lilly.   Do  you  perhaps 
recall  seeing  a  group  of  people,  members  and  employees 
of  AMPI  in  the  Page  Airways  sometime  during  March  1971, 
passing  them  briefly,  and  perhaps  seeing  Mr.  Nelson  among 
them? 

A.    I  have  no  memory  of  seeing  the  AMPI  people,  including 

Mr.  Nelson,  in  Page  Airways  during  March  1971,  although 
it  is  possible  that  I  did.   If  I  did,  it  was  a  chance 
meeting  that  occurred  while  I  was  passing  from  the  front 
door  to  the  back  door  of  Page  Airways  or. vice  versa  on 
my  return. 


6103 


-  2  - 


And  you  do  not  recall  any  such  meeting  held  ever  at  Page 
Airways  during  March  1971? 

No,  I  do  not. 

In  your  meeting  with  Harold  Nelson,  Jake  Jacobsen  and 
George  Mehren  on  March  16,  1972,  was  the  subject  of 
campaign  contributions  from  the  dairy  people  to  the 
President's  reelection  effort,  including  the  amount, 
form  and  timing  of  such  contributions,  discussed? 

During  Dr,  Mehren 's  discourse  on  AMPI's  problems, 
including  Internal  Revenue  problems  and  the  antitrust 
suit  which  had  been  filed,  as  I  recall,  he  made  some 
general  comment  to  the  effect  that  under  all  the  cir- 
cumstances AMPI  probably  should  discontinue  all  political 
contributions  until  later.   I  responded  by  saying 
something  to  the  effect  that  this  sounded  reasonable. 
I  do  not  recall  any  specific  discussion  of  campaign 
contributions  to  the  President's  reelection  effort 
in  this  meeting,  nor  a  discussion  of  the  amount,  form, 
and  timing  of  any  such  contributions,  except  as  the 
general  discussion  mentioned  above  can  be  considered 
to  encompass  these  subjects. 


DISTRICT  OF  COLUMBIA)  ss: 

Subscribed  and  sworn  to  before  me  this  //2_' day  of  April,  197^' 


NotAf-y   Pub  11 


/7^y:^--<--^^c2<2je^-U 


My  Commission  E.\piics  September  It,  IV/'f 


6104 


AFFIDAVIT 


STATE  OF  TEXAS 
COUNTY  OF  HARRIS 


I,  John  B.  Connally,  being  first  duly  sworn 
according  to  law,  depose  and  say  that  the  answer 
to  the  question  set  forth  below  is  true  to  the  best 
of  my  recollection,  information,  and  belief. 

Q.    During  March,  1971,  did  you  communicate  at 
Page  Airways  to  Bob  Lilly  or  any  other 
employee  or  representative  of  AMPI  any 
opinion  of  any  kind,  whether  optimistic 
or  otherwise,  concerning  the  possibility 
of  an  increase  by  the  Administration  in 
milk  price  supports  for  the  1971-72  mar- 
keting year? 

A.    As  I  stated  in  my  affidavit  of  April  11,  1974, 
I  do  not  recall  any  meeting,  v/hether  formal 
or  chance,  during  March  1971  at  Page  Airways 
with  Bob  Lilly  or  any  other  employee  or  rep- 
resentative of  AMPI;  therefore,  it  follows 
that  I  do  not  recall  communicating  to  any 
such  persons  at  Page  Airways  any  opinion  which 
I  might  have  held  during  that  time  concerning 
the  possibility  of  an  increase  by  the 
Administration  in  milk  price  supports  for  the 
1971-72  marketing  year. 


Subscribed  and 
day  of  May,  1974. 


Notary  Public 


FRIDAY,  NOVEMBER   16,   1973 

U.S.  Senate, 
Select  Committee  on 
Presidential  Campaign  AcTmTiES, 

Washington^  D.C. 

The  Select  Committee  met,  pursuant  to  recess,  at  9:50  a.m.  in  room 
1418,  Dirksen  Senate  Office  Building. 

Present:  Dave  Dorsen,  assistant  chief  counsel;  Donald  Sanders, 
deputy  minority  counsel;  Alan  Weitz,  assistant  majority  counsel; 
Richard  O'Hanlon  and  James  Le£»  Elder,  investigators. 

Mr.  Weitz.  Let  the  record  show  that  this  is  a  continuation  of  the 
executive  session  commenced  on  Wednesday,  November  14,  in  connec- 
tion with  the  testimony  of  Bob  A.  Lilly. 

Mr.  Lilly,  I  would  like  to  turn  to  1972  and  some  transactions  during 
that  period  that  related  to  certain  Presidential  contributions.  Can  you 
tell  me  what  you  know  about  certain  meetings  in  January  or  February 
of  1972  between  certain  representatives  of  AMPI  and  Herbert 
Kalmbach  ? 

TESTIMONY  OF  BOB  A.  LILLY—Resumed 

Mr.  Lilly.  Not  having  been  a  portion  of  the  meetings,  I  do  know 
that  in  early  1972,  January  or  February,  that  ]Mr.  Nelson — Harold 
Nelson,  and  Mr.  Jake  Jacobsen,  and  Dr.  George  Mehren  went  to  Cali- 
fornia and  met  with  Mr.  Kalmbach.  And  Dr.  Meliren,  possibly  Mr. 
Nelson,  told  me  about  this  meeting,  or  indicated  that  they  had  been  to 
California,  had  met  with  Mr.  Kalmbach  following  the  meeting,  and 
the  general  nature  of  the  discussion. 

I  don't  have  a  great  deal  of  detail  on  it.  It  had  to  do  with  the  dis- 
cussion of  political  contributions  that  the  Committee  for  TAPE,  the 
political  arm  of  AMPI,  might  make  to  the  Committee  to  Re-Elect  the 
President. 

Mr.  Weitz.  Now,  at  that  point  Dr.  Mehren  was  general  manager  and 
had  succeeded  Mr.  Nelson,  isn't  that  correct  ? 

Mr.  Lilly.  That's  true,  and  it  was  immediately  following  that.  That 
had  occurred  in  January  of  1972. 

INIr.  Weitz.  Do  you  know  who  arranged  the  meeting  with  Mr.  Kalm- 
bach in  Los  Angeles  ? 

Mr.  Lilly.  No.  I  don't  know  who  arranged  it. 

Mr.  AVeitz.  Now,  do  you  know  whether  the  contributions  or  the 
possible  contributions  that  were  discussed  at  that  meeting  were  pur- 
suant to  any  commitments  that  had  l)een  made  the  previous  j^ear  by 
Mr.  Nelson  or  anyone  else  to  the  representatives  of  the  President's 
reelection  ? 

Mr.  Lilly.  My  understanding  of  the  discussion  was  that  Mr.  Kalm- 
bach felt,  and  in  the  discussion — it  was  related  to  me  after — that  he 
expected  certain  commitments  to  be  carried  out  that  had  been  made 
previously. 

(6105) 


6106 

Mr.  Weitz.  Who  related  that  to  you? 

Mr.  Lilly.  Dr.  Mehren  related  that  to  me. 

Mr.  Weitz.  Expanding  on  that,  for  example,  when  Dr.  Mehren 
became  general  manager  hi  January  of  1972 — this  would  hav'^e  been 
before  his  meeting  AvithlNlr.  Kalmbach — did  he  engage  in  any  of  these 
discussions  with  yon  in  which  he  asked  or  tried  to  inquire  as  to  the 
extent  of  any  commitments  that  had  been  made  in  the  previous  year 
by  Mr.  Nelson  or  others  to  representatives  of  the  President  ? 

Mr.  Lilly.  Yes.  He  had  asked  me — I  had  assumed  he  had  asked 
Mr.  Xelson  and  other  people,  but  I  knoAv  he  had  asked  me  about  com- 
mitments that  were  made,  amount  of  commitments  and  how  much 
total  moneys  that  were  really  being  discussed.  And  I  truthfully  told 
him  that  I  really  didn't  have  a  true  and  solid  answer  as  to  commit- 
ments, total  commitments  that  had  been  made. 

Mr.  Weitz.  Well,  aside  from  a  true  and  solid  notion  or  answer, 
were  you  able  to  give  him  some  idea  or  relate  something  that  you 
knew  about — some  idea  about  possible  commitments'^ 

Mr.  Lilly.  Yes.  because  earlier  in  1971,  March  of  1971,  there  had 
been  a  discussion  between  Dave  Parr,  P-a-r-r,  Mr.  Harold  Nelson,  Mr. 
Jake  Jacobsen,  and  Mr.  Marion  Harrison,  where  moneys  were  dis- 
cussed, as  to  how  much  moneys  were  obligated — already  committed. 
This  happened  in  the  Madison  Hotel  in  Mr.  Nelson's  room.  And  the 
disagreement  between  the  amount  of  money  that  had  been  committed — 
Mr.  Parr  indicated  that  some  $1  million  had  been  committed  at  that 
particular  time.  Mr.  Nelson  was  of  the  opinion  that  one-half  million 
dollars  had  been  committed.  Mr.  Marion  Harrison,  also  present,  indi- 
cated commitments  had  been  made.  I  am  not  sure  what  figure  Mr.  Har- 
rison might  have  used. 

But  apparently,  commitments — the  general  consensus  of  the  discus- 
sion was  commitments  had  been  made  somewhere  between  one-half 
million  dollars  and  $1  million  at  that  particular  time. 

Mr,  Weitz.  Now,  isn't  it  also  true  that  at  those  earlier  meetings 
which  you  attended,  it  was  decided  upon  the  sugoestion  of  Jake 
Jacobsen  that  peihaps  another  one-quarter  million  dollars  would  be 
committed  in  order  to  obtain  Mr.  Connally's  assistance? 

Mr.  Lilly.  Yes.  Eeally  this  ended  the  discussion  when  no  decision 
was  arrived  at  as  to  how  much  moneys  had  or  had  not  been  committed. 
Mr.  Jacobsen  stated  that  cei'tainly  some  new  moneys,  when  Mr.  Con- 
nally  entered  into  this,  would  have  to  be  committed. 

And  in  view  of  the  discussion  of  somewhere  between  $500,000  and 
$1  million,  Mr,  Jacobsen  indicated  that  $250,000  would  be  a  fair  figure 
to  commit  as  additional  or  new  moneys  really,  as  he  referred  to  them, 
meaning  moneys  that  had  not  been  previously  committed.  And  that 
there  was  general  agreement  on  the  amount  of  $250,000  over  and  above 
Avhat  had  been  committed  should  be  added  to  those  figures. 

Mr.  Weitz,  So  to  summarize  then,  at  least  from  your  understanding 
of  that  meeting  wliich  you  attended,  that  those  gentlemen  were  speak- 
ing in  terms  of  the  commitment  of  anywhere  from  a  minimum  of 
$750,000  to  perha]«  even  $11/4  million  ? 

Mr.  Lilly.  That  is  true. 

Mr.  Weitz.  Did  they  indicate  whether  this  commitment  was  for 
AMPT  alone  or  might  it  cover  several  other  co-ops  together  with 
AMPI? 


6107 

Mr.  Lilly.  It  is  possible  that  other  cooperatives,  one  of  them  being 
Dairymen's,  Inc.,  and  the  other,  Mid-America,  could  have  been  men- 
tioned. But  it  was  my  clear  understanding;  tliat  the  commitments  being 
discussed  here  were  the  commitments  that  the  Committee  for  TAPE  or 
TAPE  and  AMPI  would  be  committed  separate  and  apart  from  any 
other  commitments  that  might  be  made. 

Mr.  Weitz.  Do  j^ou  have  any  idea  as  to  the  relative  size  or  relative 
ability  for  contributions  by,  for  example,  between  AMPI  and  Mid- 
America  and  Dairymen's,  Inc.  ? 

Mr.  Lilly.  Well,  normally  Mid- America  and  Dairymen's,  Inc.,  the 
numbers  of  producers  that  they  have  as  compared  to  the  number  of 
nroducers  that  AMPI  has,  those  two  cooperatives.  Mid- America  and 
Dairymen's,  Inc.,  combined  would  equal  the  membership  of  AMPI. 

AMPI  had  somewhere  m  the  vicinity  at  that  time  of  30,000  mem- 
bers. Those  two  cooperatives  had  in  the  vicinity  of  30,000  members. 
AMPI  later  grew  to  a  larger  size,  but  at  that  particular  time  this  was 
about  the  size  of  the  two  cooperatives. 

Mr.  Weitz.  Aside  from  the  relative  size  of  the  two  cooperatives,  had 
you  ever,  either  before  that  time  or  afterward,  discussed  with  any  rep- 
resentatives, either  at  AMPI  or  of  the  other  two  co-ops,  the  relative 
size  of  gifts  that  the}'  would  give — political  contributions  that  they 
would  make  to  the  same  candidates? 

Mr.  Lilly.  Certainly  there  had  been  conversation  between  various 
'  people,  between  myself,  between  people  in  Dairymen's,  Inc.,  between 
people  in  Mid-America,  as  to  particular  candidates — ma^'be  Con- 
gressmen, maybe  Senators,  maybe  State  officials — that  Ave  would  dis- 
cuss, asking  me  had  we  contributed  what  we  were  going  to  contribute. 
They  had  contributed,  or  they  were  going  to  contribute  a  certain 
amount. 

Mr.  Weitz.  And  would  that  in  any  way  follow  this  hypothesis,  that 
7-elative  size  ratios  such  that  generally,  or  at  least  in  some  specific  in- 
stance, their  contributions  miglit  together  equal  those  that  had  been 
made  by  AMPI  to  the  same  candidates? 

Mr.  Lilly.  It  possibly  could  have  been  the  same,  but  I  think  more  of 
the  determination  as  to  the  amount  that  might  be  contributed  would 
be  the  vicinity  or  the  State  in  which  the  particular  candidate  lived. 
If  he  lived  in  Texas,  Mid-America  has  members  in  Texas;  we  have 
the  largest  portion  of  the  members,  and  our  contribution  would  be 
far  larger  than  that  of  Mid-America  in  most  instances. 

In  an  area  like  Missouri  where  we  have  about  equal  numbers  in  that 
oai-ticular  State — Mid- America  was  headquartered  in  Missouri,  at 
Springfield,  Mo. — and  they  normally  would  contribute  more  money 
than  TAPE  would  contribute  in  that  particular  State. 

So  it  is  hard  to  answer  your  question  direct.  I  think  it  is  the  time, 
and  the  place,  and  the  State,  and  position  w^ould  probably  have  more 
bearing  on  that. 

Mr.  Weitz.  I  understand. 

Now,  I  know  we  covered  this  the  other  day,  but  I  do  just  Avant  to  be 
very  sure  of  it  before  we  leave  this  matter.  At  the  meeting  in  March 
1971  between  you  and  these  other  gentlemen,  is  it  your  understanding 
that  just  prior  to  that  on  the  same  day,  perhaps  several  hours  before, 
one  or  more  of  them  had  met  with  Mr.  Connally  in  his  office  ? 

Mr.  Lilly.  Yes. 


6108 

Mr.  Wkitz.  And  at  that  time  the  milk-price-siipport  question  and 
perhaps  other  matters  were  discussed  with  Mr.  Connally  ? 

Mr.  Lilly.  Yes.  That  is  true. 
■  Mr.  Weitz.  Who  told  you  that  such  a  meeting  had  taken  phice? 

^Ir.  Lilly.  Mr.  Nelson  discussed  it  with  me.  Mr.  Jacobsen  discussed 
it  with  me.  And  at  a  later  time,  being*  about  a  week  ago.  Dr.  Mehren 
discussed  it  with  me. 

Mr.  "Wkitz.  Xow.  are  vou  quite  clear  that  in  the  first  instance,  and 
more  recently  when  Dr.  Mehren  talked  to  you  about  it.  that  they  were 
in  fact  talking  about  a  meeting  at  which  those  gentlemen  had  all  at- 
tended together  with  Mr.  Connally  in  March  1971  ? 

Mr.  Lilly.  Of  course.  Dr.  Mehren \s  most  recent  conA'ersation  about 
a  week  ago  could  have  been  referring  back  to  the  IMarch  1972  meeting 
that  was  later  held  with  Secretary  Connally.  But  from  the  discussion 
held  recently  with  Dr.  Mehren  and  myself.  Dr.  Mehren  stated  that  he 
presented  the  economic  reasonings  that  would  have  to  be  to  justify  a 
price  increase;  and  in  1972  the  price-support  issue,  certainly  always 
important,  but  it  was  not  the  major  factor  as  it  was  in  1971. 

And  I  do  not  believe — the  effort  was  not  being  put  into  having  a 
price-support  increase  made  for  milk  in  1972.  And  so  I  think  that  Dr. 
Mehren  was  referring  to  the  1971  conversation  that  he  had;  because  as 
an  economist 

Mr.  Nicholas.  Well,  Alan,  on  that  point,  so  there  won't  be  any  con- 
fusion, as  I  understand  it.  Dr.  Mehren's  position  is  that  he  only  at- 
tended one  meeting. 

Now,  this  is  just  what  Mr.  Lilly  is  relating  from  his  conclusions  that 
he  drew  from  Dr.  Mehren's  conversations  with  him. 

Mr.  Weitz.  So  that  if,  for  example,  it  were  determined  or  it  Avas 
suggested  that  Dr.  Mehren  had  attended  only  a  meeting  with  ]\Ir. 
Connally  in  March  of  1972  and  at  that  time  discussed  economic  con- 
siderations over  a  number  of  agricultural  mattei's.  you  would  not  nec- 
essarily dispute  that  ? 

Mr.  Lilly.  No.  no.  T  would  not. 

Mr.  Weitz.  But  going  back  to  the  meeting  that  you  attended  with 
these  gentlemen.  March  of  1971,  did  Mr.  Nelson  clearlv  relate  to  you 
that  he  had  attended  a  meeting  with  Mr.  Jacobsen  and  ]Mr.  Connally 
several  hours  before  ? 

]Mr.  Lilly.  Mr.  Jacobsen  more  clearly  indicated  it.  Mr.  Nelson,  as  my 
memory  recalls  the  incident  rijrht,  also  had  attended  a  meeting  with 
^Ir.  Connally  along  with  Dr.  Mehren.  because  this  was  some  2  hours 
after  the  meeting  had  been  held.  They  were  discussinc:  about  the  recep- 
tion that  ]Mt-.  Connally  had  given  them :  tliat  he  had  listened  and  felt 
like  that  they  had  a  justifiable  cause  in  pursuing  the  matter  that  they 
were  trving  to  cain  the  price-support  increase. 

Ml".  Weitz.  Well,  in  any  event,  whether  oi-  not  Dr.  MeliT-en,  who  was 
no<-  at  the  second  meetininr  in  ^larch  of  1971  with  you 

yiv.  TjIlly.  He  was  not. 

Mr.  Weitz.  But  whether  or  not  he  had  attended  that  meeting,  or 
v/hether  in  fact  ^Iv.  Nelson  had  attended  that  meeting  with  'Sir.  Con- 
nail  v.  it  Avas  clear  to  a'Ou  that  ]Mr.  Jacobsen  had  attended  the  meetinir 
with  :\rr.  Connally? 

Mr.  Lilly.  There  Avas  certain! v  no  doubt  in  mA  mind  about  that. 


6109 

Mr.  Weitz.  And  there  was  no  doubt  also  in  your  mind  from  what 
those  gentlemen  said  that  Mv.  Jacobson  was  of  the  opinion,  and  per- 
haps as  a  result  of  his  meetino;  with  Mr.  Connall}',  that  in  order  to 
obtain  Mr.  Connally's  assistance  in  obtaining  a  favorable  decision  by 
the  administration  with  regard  to  milk  price  supports,  new  money 
should  be  conmiitted  by  AMPI  ? 

Mr.  liiLLY.  That  is  true. 

Mr.  Weitz.  Xow  let  us  go  back  to  1972.  and  after  the  meeting  be- 
tween Mr.  Kalmbach  and  Mr.  Jacobsen  and  Xelson  and  Dr.  ^Nlehren 
in  Los  Angeles 

]Mi-.  Saxders.  Well,  now,  if  you're  leaving  that  1971,  the  possibility 
of  a  meeting,  could  I  develop  that  a  little  bit  more  ? 

]Mr.  Weitz.  Cei-tainly. 

Mr.  Sanders.  My  line  of  questioning  here,  Mr.  Lilly,  will  pertain 
only  to  the  information  that  you  received  which  indicated  to  you  that 
Jacobsen  had  met  with  Secretary  Connally  before  a  number  of  AMPT 
officials  had  a  meeting  in  March,  and  also  the  possibility  that  Mr.  Xel- 
son attended  that  meeting. 

From  what  you  have  said,  would  it  be  fair  to  say  that  toward  the 
end  of  March  1971,  you  and  a  number  of  other  A^IPI  officials  had  a 
meeting  at  the  Madison  Hotel  where  there  was  a  discussion  concern- 
ing the  commitments  which  were  due  or  owing  to  some  adjunct  of  the 
Republican  Party.  And  Mr.  Jacobsen  was  in  attendance  at  that  meet- 
ing. 

Is  that  correct? 

Mr.  Lilly.  That's  correct. 

Mr.  Saxders.  And  he  made  some  remarks  there  which  indicated  to 
you  that  he  thought  a  new  commitment  of  about  one-quarter  million 
dollars  would  be  necessary  if  Seci-etai'v  Connally  were  to  be  involved  ? 

Mr.  Lilly.  That's  true. 

^Ir.  Saxders.  Was  it  at  this  meeting  tliat  Mr.  Jacobsen  told  you 
that  he  had  met  with  Secretary  Connally  just  pi-eviously  ? 

Mr.  Lilly.  This  was  the  meeting  that  they  were  talking  about  hav- 
ing met  with  Seci-etary  Connally.  And  this  is.  as  my  memory  serves 
me:  and  that  Mr.  Connally  had  been  fully  advised — ^well,  let  me 
digress  back  a  moment,  the  reason  for  it. 

Marion  Harrison  was  there.  Marion  Harrison  had  been  an  attoi-ney 
that  had  been  working  rather  closely  with  Mr.  Nelson  and  INfr.  Parr, 
and  this  had  been  going  on  practically  the  entire  month  of  ALarch. 
talking  with  tlie  various  officials  in  th°  Agi'iculture  De]:)artment.  in 
the  executiA'e  branch,  and  others.  All  of  the  officials  that  they  contacted 
I  am  not  aware  of. 

It  had  come  to  a  particular  point — of  coui'sc,  certainly  those  of  us, 
many  of  us,  including  myself,  were  working  on  the  Hill"  contacting 
legislators  and  getting  bills  introduced  to  accomplish  the  same  thing, 
as  well  as  other  peo])le  from  othei-  cooperatives  across  the  country. 

But  at  this  particular  time  it  looked  ratlier  doubtful  as  far  as  getting 
achninistrative  action,  and  ]Mr.  Harrisoii  had  mor-e  or  less  exhausted 
and  indicated  something  to  the  effect  that  he  had  exhausted  just  about 
all  avenues  that  he  knew  to  exhaust  to  come  up,  to  influence  anyone, 
to  convince  anyone  to  make  a  chanire  insofar  as  administration — anrl 
I  use  that  in  a  broad  term — without  leo-islative  action. 


30-337  O  -  74  -    17 


6110 

And  consequently,  Mr.  Jacobsen,  havinjsrbeen  a  close  associate,  a  close 
friend  of  Mr.  Connally's  for  many  years,  then  had  been  in  Washino:ton 
during  most  of  this  time — what  he  might  have  been  doing— I'd  see  him 
miite  often^ — I  am  not  truly  aware,  but  it  was  then  decided  that  Mr. 
Connally  was  going  to  have  to  be  brought  into  this;  and  this  was  a 
new  avenue. 

Mr.  Harrison  was  not  in  a  position  to  talk  to  Mr.  Connally  because 
he  did  not  know  him  as  Avell  as  Mr.  Jacobsen.  So  Mr.  Jacobsen  was 
brought  into  it,  then  set  up  a  date;  and  this  was  discussed  also  prior 
to  having  contacted  Mr.  Connally  the  same  week. 

And  then  the  meeting  was  set  up ;  and  insofar  as  I  know,  the  three 
that  attended  the  meeting  with  Mr.  Nelson,  Dr.  Mehren,  and  Jake 
Jacobsen  with  Secretary  Connally.  And  then  innnediately  following 
that  in  the  Madison  Hotel  was  where  the  discussion  of  amounts  of 
money  was  discussed.  Mr.  Jacobsen  said  to  get  Mr.  Connally  into  this, 
we  are  going  to  have  to  have  $250,000 — this  was  a  final  determination — 
at  least  one-quarter  million  dollars  new  money  into  it. 

Mr.  Saxders.  '\^nien  and  where  did  you  first  learn  that  Jacobsen 
had  met  with  Sex?retarv  Connally  between  March  12  and  March  25? 

Mr.  Lilly.  At  the  Madison  Hotel  the  week  of  the  lotli,  16th  of 
March  1971.  I'm  not  sure  what  day  that  it  would  have  been,  but  it  was 
that  particular  week  in  March. 

Mr.  Saxders.  And  it  was  at  that  meeting  that  you  first  learned  from 
Jacobsen  that  he  had  met  with  Secretary  Connally  just  previous  to  the 
meeting  ? 

Mr.  Lilly.  Yes;  there  had  been  a  meeting  with  Secretary  Connally 
just  prior  to  that  meeting. 

Mr.  Sanders.  Did  it  appear  to  you  it  liad  been  on  the  same  day? 

Mr.  Lilly.  Yes. 

Mr.  Sanders.  AVere  you  meeting  at  nighttime  in  the  Madison 
Hotel? 

Mr.  Lilly.  It  was,  oh,  5  o'clock,  5  :80.  I  mean  it  was  almost  dark.  I 
mean  it  was  late  in  the  evening. 

Mr.  Sanders.  Did  ISIr.  Jacobsen  reveal  his  contact  with  Connally 
to  you  personally  aside  from  the  others,  or  was  it  in  the  presence  of  the 
entire  group  ? 

Mr.  Lilly.  No  ;  this  was  in  the  presence  of  the  group  there. 

Mr.  Sanders.  Did  he  indicate  that  he  had  met  with  Secretary  Con- 
nally in  the  Secretary's  office  ? 

Mr.  Lilly.  Yes. 

Mr.  Sanders.  Do  you  recall  whether  he  said  who  attended  with  him  ? 

Mr.  Lilly.  I  am  not  sure  that  he  stated  that  Mr.  Nelson,  Dr.  Mehren, 
and  himself  attended;  and  this  might  be  an  assumption  on  my  part 
that  the  three  of  them  attended.  But  I  am  convinced  that  the  three  of 
them  had  just  returned  to  the  Madison  Hotel  from  a  meeting  with 
Secretary  Connally. 

Mr.  Sanders.  Was  Dr.  Mehren  at  the  Madi'-on  meetiuir  ? 

Mr.  Lilly.  No:  Dr.  Mehren  had  left  at  about  tliat  time  and  had 
Sfone  to  Eumpe.  So  two  of  the  three  that  would  have  met  Avere  at  the 
hotel,  and  that  was  Mr.  Nelson  and  Jake  Jacobsen. 

Mr.  Sanders.  Are  you  saying  at  the  end  of  March  of  1971  Dr.  Mehren 
was  in  Europe  ? 

Mr,  Lilly.  At  along  about  the  20th,  somewhere,  18th,  the  20th,  he 
went  to  Europe. 


I 


6111 

Mr.  Sanders.  But  on  the  night  you  were  meeting  in  the  Madison 
he  was  still  in  the  United  States  ? 

Mr.  I^iLLY.  He  was  in  the  United  States,  but  he  was  not  at  the  meet- 
ing. I  think  he  had  gone  to  New  York  in  preparation  for  going  to 
Europe.  I'm  not  sure  about  this,  but  I  do  know  on  Friday,  the  same 
week,  which  was  the  18th,  he  was  en  route  to  Europe,  because  he  had 
asked  me  to  take  a  briefcase  back  to  San  Antonio  for  him. 

Mr.  Saxders.  Now,  Avhat  I  want  to  get  clear  is  what  circumstances 
did  you  learn  at  the  meeting  at  the  Madison,  which  indicated  to  you 
that  Dr.  Mehren  had  attended  the  meeting  in  Secretary  Connallv's 
office? 

Now,  in  answering  this  I  want  you  to  divorce  what  Dr.  Mehren  has 
since  told  you,  let's  say  a  week  ago.  I  want  to  know  what  you  learned 
that  night  at  the  Madison  which  indicated  to  you  that  Dr.  Mehren 
attended  that  meeting. 

Mr.  Lilly.  "\^''ell.  pi'obably  T  am  getting  the  two — because  Dr.  Meh- 
ren not  being  present,  and  as  I  truthfully  recall  the  meeting,  T  was 
under  the  clear  impression  that  Tkive  Parr  and  not  George  INIehren 
had  attended  the  meeting.  And  this  was  when  I  learned,  about  a  week 
ago,  that  Dr.  Mehren  said  he  had  attended  the  meeting. 

So  Dr.  jSIehren  had  provided  the  figures,  the  information  that  would 
I)e  used,  being  an  economist. 

Mr.  Sanders.  You  are  not  now  saying  that  Parr  was  present  and  at- 
tended the  meeting  in  the  Secretary's  office? 

Mr.  Lilly.  No ;  I  was  under  the  impression  that  he  was  probably  the 
third  person  that  went  to  Connally  at  that  particular  time;  but  Dr. 
Mehren  about  a  week  ago  stated  that  he  was  the  one  that  was  at  Mr. 
Connally's  meeting. 

Mr.  Sanders.  During  the  meeting  in  the  Madison  Hotel 

IVIr.  Lilly.  Yes. 

Mr.  Sanders  [continuing].  Did  you  learn  of  facts  which  would  have 
indicated  to  you  that  Nelson  was  in  attendance  in  the  Secretary's  office, 
and  what  are  those  facts? 

Mr.  Lilly.  Other  than  the  discussion  of  meeting  with  the  Secretary 
and  that  the  Secretary  had  listened  to  their  justification  for  a  price- 
support  increase,  what  might  happen  if  they  did  not  get  the  price- 
support  increase  insofar  as  milk  production  was  concerned,  the  overall 
economic  thing,  and  having  presented  that  to  Secretary  of  the  Treasury 
Connally. 

Mr.  Sanders.  In  other  words,  you  were  deducing,  because  of  the  im- 
portance and  complexity  of  the  discussion  they  would  have  had  to  have 
with  the  Secretary,  that  Nelson  had  to  be  there. 

It  that  what  you  are  saying  ? 

Mr.  Lilly.  I'think  that  Mr.  Nelson  w^ould  have  met  with  Mr.  Jacob- 
sen  had  he  had  met  with  Secretary  Connally,  for  one  thing. 

Mr.  Sanders.  But  at  the  meeting  at  the  Madison  did  Mr.  Jacobsen 
say  that  Nelson  had  been  with  him  in  the  Secretary's  office  ? 

M)-.  Lilly.  Well,  Mr.  Nelson  was  talking  about  having  met  there, 
and  ]\rr.  Jacol)sen  was  talking  about  having  met  with  Secretary 
Connally. 

Mr.  Sanders.  OK. 

Mr.  Nicholas.  On  that  point  there's  a  couple  of  questions  that  I 
would  like  to  ask  my  client. 


6112 

Mr.  Lilly,  do  yon  have  any  recollection  whatsoever  of  the  pnrpose 
or  the  reason  why  you  came  to  Washin^on  in  the  first  place  at  this 
particular  time,  which  would  be  March  of  1971  ? 

I  mean,  was  there  any  meetinor  in  San  Antonio  or  Dallas  or  Arkansas 
or  on  the  telephone,  conversations  that  would  have  brought  you  all 
together  here?  There  had  to  he  some  prearrangement,  was  there  not? 

Do  vou  recall  anvthing? 

Mr." Lilly.  Into  Washington,  B.C.  ? 

Mr.  Nicholas.  Yes.  Reservations  had  to  be  made,  hotel  reservations 
had  to  be  made,  plane  reservations. 

Mr.  Lilly.  Yes,  true. 

Mr.  Nicholas,  Well,  do  you  have  any  independent  recollection  of 
any  documents  or  any  secretary  that  made  the  reservations,  or  anybody 
that  would  have  been  talked  to  about  this  prior  to  the  time  you  all 
arriAed  in  Washington ? 

And  how  did  you  arrive,  if  3'ou  know  ?  If  you  don't  know,  it's  all 
right.  I'm  just  asking  you  since  we're  on  this  point,  because  I  don't 
know  myself. 

Mr.  Lilly.  In  my  diary  I  was  in  San  Antonio ;  I  was  in  Austin,  Tex. : 
I  was  in  the  District  of  Columbia.  I  believe  my  calendar  indicates  I 
was  back  from  the  District  of  Columbia,  back  to  San  Antonio.  I  had 
some  State  legislation  that  I  was  concerned  with  at  the  time.  And  I 
have  forgotten  what  my  calendar — and  I  have  made  it  available — 
my  diary. 

I  had  not  been  in  Washington  the  full  week.  I  had  been  in  Wash- 
insfton  off  and  on  most  of  the  time  during  the  month  of  March,  and  my 
calendar  will  reflect  that.  How  many  days,  I  don't  really  know. 

But  I  would  have  had  reservations.  I  would  have  stayed  at  the 
^Madison  Hotel. 

Mr.  Nicholas.  Well,  would  they  be  in  your  name  ? 

]Mi".  Lilly.  And  it  would  be  in  m^'  name. 

Mr.  Nicholas.  Well.  Avould  there  be  reservations  in  Dr.  Mehren's 
name? 

Mr.  Lilly.  Yes,  there  would  be  reservations  in  Dr.  Mehren's  name. 
Mr,  Nelson's  name,  Mr.  Parr's  name ;  Mr.  Jacobson  stayed  at  the  same 
hotel.  They  would  not  ha^e  been  in  Mr.  Harrison's  name.  He  lives  in 
the  vicinity  of  Washington ;  I'm  not  sure  where. 

Mr.  Nicholas.  Well,  do  you  recall  whether  or  not  there  was  any  dis- 
cussion at  all  prior  to  anyone's  arrival  in  Washington  ?  For  instance, 
Harold  Nolsoi},  was  there  anything  said  by  Harold  Nelson  in  San 
Antonio? 

Was  AMPI  located  in  San  Antonio  at  this  time? 

Mr.  Lilly.  Yes. 

Mr.  Nicholas.  The  main  office  ? 

Mr.  Lilly.  Right. 

Mr.  Nicholas.  And  Dairymen's,  Inc.  ? 

Mr.  Lilly.  Yes. 

Mr.  Nicholas.  And  Harold  Nelson  was  general  manager  or  Avas  not 
general  manager  at  that  time  ? 

Mr.  Lilly.  He  was  general  manager. 

Mr.  Nicholas.  What  was  Dr.  Mehren's  position  at  that  time,  if  you 
know  ? 

Mr.  Lilly.  Dr.  Mehren  was  a  consultant  for  AMPI.  He  was  not  on 
as  a  regular  employee  in  the  true  sense  of  the  word.  He  was  residing  in 


6113 

New  York  City  or  thereabouts,  and  he  had  been  on  a  consultant  fee 
basis  foi-  AMPI  since  about  1968. 

Mr.  NicFioLAs.  Well,  assumino-  that  Dr.  Mehren  was  at  the  :Madison 
Hotel  Avith  the  other  irentlemen,  would  they  have  been  there  before 
they  went  to  Mr.  Connally's  office  ? 

Mr.  Lilly.  At  the  hotel  ? 

Mr.  XiCHOLAs.  Yes. 

Mr.  Lilly.  Oh.  yes.  They  had  been  here.  Mr.  Xelson.  Mr.  Jacobsen, 
Dr.  iVfehren,  Dave  Parr,  had  been   in  Washington  all   week  long. 

Mr.  Nicholas.  They  had  already  been  here  ? 

INlr.  Lilly.  They  had  already  been  here. 

Mr.  Nicholas.  You  met  them  here  then  ? 

Mr.  Lilly.  T  met  them  here.  T  Mas  in  and  out  of  Washington  that 
pai-ticular  week. 

]\rr.  Nicholas.  Wliy  weren't  you  inclu^ted  in  the  meeting  in  Con- 
nail  v's  office,  or  was  there  any  reason  for  that? 

Mr.  Lilly.  No  particular  reason.  I'm  not  sure. 

Mr.  Nicholas.  Well,  who  made  up  the  meeting? 

Mr.  Lilly.  Jake  Jacobsen  made  up  the  meeting,  and  he  made  the  de- 
termination. And  at  this  point  Marion  Harrison's  efforts,  influence, 
ability  to  go  further  with  this  outside  of  the  legislative  process  had 
come  to  an  end,  and  this  was  discussed.  And  he  had  exhausted  about  all 
avenues  that  he  knew  to  approach.  And  at  this  point  was  when  Mr. 
Jacobsen  had  come  into  it  and  could  have  some  additional  input  by 
goine:  through  ISIr.  Connally. 

IVlr.  Nicholas.  Now  in  order  to  get  in  proper  perspective,  you  testi- 
fied that  flake  Jacobsen  is  a  pei-sonal  friend  of  Secretary  John  Con- 
nally; is  that  correct? 

Mr.  Lilly.  True. 

Mr.  NiCHOi^vs.  Or  Governor  Connally? 

Mr.  Lilly.  Yes,  true. 

Mr.  Nicholas.  And  is  Harold  Nelson  a  pei-sonal  friend  of  John 
Coimalfy's.  if  you  know? 

]Mr.  Lilly.  Not  on  a  close  personal  basis,  to  my  knowledge. 

Mr.  NicimLAS.  If  you  know. 

Mr.  T^iLLY.  I  don't  know. 

Mr.  Nicholas.  Now.  the  trip  that  Dr.  Mehren  took  to  Europe,  are 
you  speaking  from  memory  alone  as  to  when  he  took  that  trip,  or  do 
you  have  anything 

Mr.  Lilly.  No,  I  don't  have  anv  notes  or  anything.  The  only  thing 
that  T  do  recall,  we  departed  on  March  18  to  i-eturn  to  San  Antonio. 
Dr.  Mehren  was  en  route  to  Eui'ope.  oi-  was  i)reparing  to  go  to  Europe. 
At  least  he  was  no  longer  in  Washington ;  and  he  had  left  a  briefcase 
with  me,  and  I  did  carry  it  to  San  Antonio. 

Mr.  Nicholas.  Well,  is  it  possible  that  Dr.  Mehren  could  have 
already  gone  to — taken  his  flight  to  make  his  connection  to  travel  to 
Europe  before  the  meeting? 

Ml-.  Lilly.  No,  I  don't  think  so.  He  was  in  town  during  the  day.  He 
didn't  shoAv  up  at  the  meeting  on  that  particular  night  and  at  the 
hotel. 

Mr.  Nicholas.  All  right. 

Well,  Dt-.  IVIehren  not  being  an  employee  oi-  an  officer  of  AMPT  at 
that  time,  or  for  TAPE 

Mr.  Lilly.  Yes. 


6114 

Mr.  Nicholas  [contimnnfr].  And  beinjr  employed  only  in  the  capac- 
ity of  some  type  of  economic  consultant  in  the  milk  industry,  would  it 
have  been  likely  that  he  would  have  been  at  that  meetinc:  in  that 
capacity  since  he  didn't  know 

Mr.  Ltllv.  It's  quite  possible,  but  T  think  had  he  been  at  the  hotel 
at  that  particular  time,  he  would  have  probably  been  at  the  meetiner. 

Mr.  NiriTOLAs.  TVell,  did  he  have  any  other  employers  besides  AMPT 
at  that  time? 

Mr.  Lti,lt.  Yes.  He  was  employed  Avith  a — I'm  not  sure  it's  the  World 
Tm])ort-Export  Bank — but  in  some  capacity  that  had  to  do  with  import 
and  export  of  a<rricultural  commodities  in  New  York  City.  This  wns, 
his  main  occupation. 

Mr.  Nicholas.  Well,  do  you  know  whether  or  not  he  had  any  con- 
nection with  the  TLS.  Government  at  that  time  ? 

Mr.  Lilly.  No,  T  don't.  I'm  not  sure  of  the  tie-in  between  the  ^roup. 

Mr.  Nicholas.  All  riffht. 

That's  all  I  have. 

Mr.  Saxders.  Just  a  couple  of  more  questions. 

Did  you  tell  us  on  Wednesday  that  you  had  learned  that  after 
Jacobsen  and  Nelson  finished  their  meetin<r  with  the  Secretary  and 
were  leaving,  Jacobsen  was  called  back  in  ? 

Mr.  Lilly.  Dr.  Mehren — T  did  not  learn  this  until  last  week.  And 
when  you  say  the  meetings  on  Wednesday,  I'm  not  sure  it  was  on — 
you're  talkino;  about  March  of  1971  ? 

Mr.  Sanders.  When  I  said  Wednesday,  I  meant  our  meeting  with 
you  this  past  Wednesday. 

Mr.  Lilly.  Oh,  I'm  sorry. 

Mr.  Saxders.  T  say,  did  you  tell  us  this  last  Wednesdav 

Mr.  Lilly.  Yes.  I  told  you  at  our  last  meetinsf  that  last  week  Dr. 
Mehren  told  me  that  he  and  Mr.  Nelson  and  Mr.  Jacobsen  had  met 
with  the  Secretary.  They  discussed  the  price  sup])ort,  find  it  had  been 
sti'ictly  on  this  level :  and  as  they  were  leaving  the  meeting,  the  Secre- 
tary said,  "Jake,  T  would  like  to  see  you  a  mimite."  And  there  was  a 
private  discussion  between  Secretary  Connally  and  Jake  Jacobsen 
without  PTarold  Nelson  and  Georce  Mehren  beincr  present. 

Mr.  Saxders.  Before  you  learned  this  from  Dr.  Mehren  last  week, 
you  had  not  known  about  those  facts  of  Jacobsen  beinp:  called  back  in  ? 

Mr.  Lilly.  No.  T  had  not. 

Mr.  Saxders.  So  that  if  Mehren  in  fact  did  not  meet  with  Secretary 
Connally  in  March  1971,  then  the  circumstances  of  Jacobsen  beins: 
called  back  in  had  to  have  occurred  in  March  of  1972? 

Mr.  Lilly.  Well,  that  would  be  true.  T  mean,  the  same  people  were 
at  the  same  meeting  in  March  of  1972  with  the  same  efentlemen. 

Mr.  Nicholas.  That's  not  the  question  he  asked  you. 

Mr.  Lilly.  What  did  he  ask  ? 

Mr.  Nicholas.  He  said  if  Dr.  Mehren  was  not  at  the  March  1971 
meetin£r<  if  it  is  a  proven  fact  that  he  is  not  there,  that  he  wasn't  there, 
then  Dr.  Mehren  then  would  have  had  to  be  talkini;  about  the  March 
1972  meetino;.  correct  ? 

Mr.  Lilly.  That's  ricfht. 

Mr.  Saxders.  Thank  you. 

Mr.  Weitz.  Just  one  other  question.  Did  T  understand  you  correctly, 
that  to  your  recollection  Dr.  Mehi-en  had  left  Washinofton  on  the  18th? 

Ts  that  vour  best  recollection  ? 


6115 

Mr.  Lilly,  I  know  lie  left  about  that  time. 
Mr.  Weitz.  T  see. 

Mr.  Lilly.  I  know  that  I  was  carrying  a  briefcase,  and  the  reason 
I  remember  the  briefcase  is  he  said  they  had  some  stocks  and  bonds  in 
it  that  Avere  his,  and  he  wanted  me  to  take  them  to  San  Antonio.  He 
wanted  me  to  put  them  in  the  vault  at  tlie  AMPI  office,  which  I  did. 
And  he  handed  me  the  briefcase,  and  1  did  carry  it  back.  I  mean,  I  was 
res])onsible  for  gettino-  it  back.  And  he  was  leaving  for  Europe.  I'm  not 
sure  at  what  date  he  left.  l)ut  I  know  that  he  was  not  on  the  return 
trip  with  us  to  San  Antonio  on  Fi-iclay  night. 

Mr.  Weitz.  I  understand.  And  again,  to  summarize,  without  regard 
to  whether  Dr.  Mehren  had  attended  the  meeting  with  Mr.  Connally 
in  Mfirch  of  1971,  and  without  regard  to  whether  or  not  Mr.  Nelson 
had  in  fact  attended  that  meeting  or  merely  the  meeting  thereafter 
in  the  Madison  Hotel  in  March  of  1971  with  you,  is  it  your  clear  recol- 
lection and  testimony  that  Mr.  Jacobsen  had  in  fact  met  with  Mr. 
Connally  shortly  before  that  meeting  in  the  Madison  Hotel  in  March 
of  1971? 

Mr.  Lilly.  Well,  certainly  yes,  he  would  have  been  there. 
Mr.  Weitz.  All  right. 

Now  I  would  like  to  turn  back  to  the  period  of  1972.  You  have  pre- 
viously testified  to  your  knowledge  concerning  a  meeting  between  Mr. 
Kalmbach  and  Dr.  Meliren  and  Mr.  Nelsori  and  Mr.  Jacobsen  in 
February  of  1972. 

Now,  do  you  know  of  a  meeting  that  took  place  in  March  of  1972 
between  Mr.  Connally,  Mr.  Jacobsen,  Mr.  Nelson,  and  Dr.  Mehren  in 
Washington?  And  if  so,  could  you  tell  us  what  you  know  about  that 
meeting  ? 

Mr.  Lilly.  I  haA^e  notes  indicating  there  was  such  a  meeting  held 
between  Mr.  Jacf)bsen,  Mr.  Nelson.  Dr.  George  Mehren  in  Washington, 
D.C.,  the  days  of  :March  20,  21,  22, 1972,  or  :\rarch  27,  28,  29, 1972.  And 
they  did  meet  with  Secretary  Connally,  and  I  would  assume  it  would 
be  in  his  office  in  this  instance.  I  don't  know  where  the  meeting  would 
have  been,  but  apparently  it  would  have  been,  because  of  my  notes,  the 
gentlemen  mentioned  above  met  with  Secretary  Connally.  And  Dr. 
IVIehren  told  me  of  this  meeting  on  April  4, 1972,  according  to  my  notes 
that  I  did  wi-ite  down. 

And  while  present  Dr.  Mehren  told  me  that  Secretary  Connally  called 
John  INIitchell  in  the  presence  of  Jacobsen,  Nelson,  and  Mehren;  and 
he  discussed,  first — and  these  ai'e  my  words — delaying  contributions, 
meaning  conti'ibutions  that  the  Committee  foi-  TAPE  might  make  on 
behalf  of  the  Bepublican  Party,  be  delayed;  second,  reducing  the 
AMPT  antitrust  suit;  and,  third,  the  promise  to  go  slow  on  an  IRS 
investigation,  this  being  an  IRS  investigation  carried  over  from  an 
audit  of  AMPI  in  the  year  1968. 

My.  Weitz.  Now,  when  did  Dr.  Mehren  relate  the  information  about 
that  meeting  to  vou  ? 

Mr.  Lilly.  On  April  4. 1972. 
INIr.  Weitz.  So  you're  f  aii-ly  certain  of  that  ? 

Mr.  Lilly.  At  least  this  is  what  I  haA^e  on  my  notes  as  to  when  the 
conversation  was  held. 
■:       Mr.  Weitz.  Do  you  remember  when  those  notes  were  prepared? 
m      Mr.  Lilly.  These  notes  were  prepared  on  or  about  the  time  of  the 
W  conversation. 


6116 

Mr.  Wettz.  So  they  were  essentially  contemporaneous  to  the  meet- 
injr? 

INfr.  Ltij.y.  That's  true. 

Mr.  Wtatz.  Were  they  prepared  dnrinc:  tlie  meeting  or  shortly 
thereafter? 

l\f r.  Lilly.  Shortly  thereafter. 

Mt".  Wettz.  T  see. 

Mr.  Ltllt.  Some  notes  may  have  been  made  durintj  the  meeting 
and  then  broadened  out  following:  the  meetino:. 

IMt-.  Wettz.  Now,  when  yon  say  perhaps  the  20th  to  the  22d  of  March 
as  1)einfr  the  time  frame  when  those  rrentlemen  met  with  Mr.  Connallv. 
or  perhaps  the  27th  to  the  29th,  is  that  vour  best  recollection  as  indi- 
cated in  your  notes  from  what  von  had  heard  from  Dr.  Mehren? 

Mr.  Lilly.  Yes.  In  my  notes  T  have  the  20th,  21st,  22d,  and  then  this 
was  discussed  with  my  wife.  She  has  the  dates  of  the  27th.  28th,  and 
29th.  .And  it's  about  the  same  meeting,  the  same  people  are  involved, 
and  so  her  notes  were  written  and  there  is  some  small  difference  in — 
apparently  a  week's  difference  in  the  dates. 

INIr.  Weitz.  Now.  yon  were  told  this  on  April  4. 

Mr.  NirTTOLAS.  Now,  Alan,  on  that  point  T  would  really  like  for  my 
client  to  read  into  the  record  what  his  notes  reflect  so  that  you  can 
draw  your  own  conclusions  from  his  notes  that  he  made,  if  it  is  all 
riirht. 

Mr.  Wettz.  Let's  go  off  the  record  for  a  minute. 

[Discussion  off  the  record.] 

Mr.  Wettz.  Let's  jro  back  on  the  record. 

Now,  as  T  started  to  say,  you  were  told  about  this  meeting  on  April  4. 
The  two  time  frames  you  have  suggested  are  anywhere  from  1  week  to 
2  weeks  prior  thereto, 

Mr.  Lilly.  That  is  true. 

Mr.  Weitz.  Is  it  possible,  or  does  it  refresh  vour  recollection  in  any 
Avay,  for  example,  if  Dr.  Mehren  had  said  it  had  been  as  much  as  21/2 
weeks  before  that,  perhaps  around  the  15th  or  16th  of  March? 

Does  that  refresh  your  recollection  in  any  way? 

Mr.  Lilly.  No  ;  it  does  not. 

Mr.  Weitz.  Did  he  actually  talk  in  terms  of  specific  days  or  in  terms 
of  time  frame  of  a  week  or  2  Aveeks  ago  ? 

Mr.  Lilly.  Tn  terms  of  time  frame. 

Mr.  Weitz.  The  second  alternative  T  gave  you  ? 

Mr.  T^nxY.  Yes. 

Mr.  Weitz.  Tn  other  words,  a  Aveek  ago  or  2  weeks  ago  ? 

Mr.  Lilly.  That's  true. 

■  Mr.  Weitz.  So  if  he  were  speakina:  to  you  on  A^ril  4  and  had  said, 
according  to  your  notes,  2  weeks  ajro,  or  according  to  your  wife's 
notes,  perhaps  a  week  before  T  heard  this  from  Dr.  Mehren  on  April  4, 
had  he  said  21/2  weeks  before  that  or  a  little  over  2  weeks  a^o  to  you, 
it  might  perhaps  not  have  been  rlear  as  to  the  exact  dates  rather  than — 
or  as  opposed  to  a  time  frame  baekward  from  April  4? 

Mr.  Lilly.  That's  riirht.  I'm  sure  that  in  March  of  1972  there  was  a 
meetincr;  he  was  reporting  to  me  on  a  meetinji  that  was  held.  And  the 
dates  T  think  could  be  easily  constructed  because  calendars  are  made 
out  as  to  activities,  where  we  travel,  and  this  is  a  matter  of  record,  too. 

Mr.  Weitz.  This  would  be  Dr.  Mehren's  calendar,  for  example? 

-  >.  Lilly.  All  of  the  people  there  within  the  home  office. 


6117 

Mr.  Weitz.  That's  right.  But  you  are  clear  that  sometime,  perhaps 
in  the  last  half  of  March  of  1971— March  of  1972,  I'm  sorry. 

Mr.  Lilly.  Yes,  1972. 

Mr.  Weitz.  As  Dr.  Mehren  related  to  you  on  April  4,  he  and  Mr. 
Nelson  and  Mr.  Jacobsen  had  met  with  Mr.  Connally  in  his  office. 

Mr.  Lilly.  True. 

Mr.  Weitz.  All  right. 

Now,  you  have  said  that  he  had  told  you  of  the  matters  discussed, 
and  you  said  one  of  your  words  was  that  the  antitrust  suit  would  be 
''delayed";  and  you  noted  in  your  testimony  that  that  was  your  word. 

Do  you  recall  what  his  word  was  ? 

Mr.  Lilly.  "VMiat  I  have  in  my  notes  instead  of  "delayed,"  I  have  "to 
slow  down  its  antitrust  suit  against  AMPI  at  a  little  later  date  to  a 
wrist  slap." 

ISIr.  Weitz.  Now.  is  that  your  l)est  recollection  of  his  word  ? 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  Or  his  phrase  ? 

Mr.  Lilly.  His  phrase. 

Mr.  Weitz.  And  what  is  your  best  recollection  of  his  words  about 
the  discussion  with  regard  to  the  IRS  audits  of  AMPI  presently  at 
that  time  pending  ? 

Mr.  Lilly.  On  the  IRS  all  I  have  in  my  notes  "and  promise  to  go 
slow  on  IRS."  This  is  my  wording,  but  it  would  indicate  that  Dr. 
Mehren  said  something  comparable  to  this. 

Mr.  Weitz.  I  see. 

Well,  could  you  tell  me  what  else  Dr.  Mehren  told  you  transpired 
either  at  that  meeting  or  other  meetings  during  their  visit  to  Wash- 
ington in  March  of  1972  ? 

Mr.  Lilly.  Yes.  Dr.  IMehren  indicated  further  while  Mr.  Nelson, 
Mr.  Jacobsen,  and  himself  were  present  with  Secretary  Connally,  that 
he  called  Senator  Dole,  chairman  of  the  Republican  National  Com- 
mittee. And  again,  my  notes  indicate  that  Senator  Dole  called — I  don't 
know  if  John  Mitchell  had  been  called  again  or  not — but  Senator  Dole 
and  John  Mitchell  both  agreed  to  defer  any  obligations  due  the  Repub- 
lican Party,  meaning  contributions  that  might  be  due,  but  to  delay 
them  until  near  the  general  election  time. 

Mr.  Weitz.  Do  you  know  whether 

ISIr.  Lilly.  When  the  heat  was  off. 

Mr.  Weitz.  That  was  their  language  as  I'elated  to  you? 

Mr.  Lilly.  Yes.  That  was  George  Mehren's  language, 

Mr.  Weitz.  I  see. 

Do  you  know  whether — or  did  Dr.  Mehren  in  any  way  indicate  to 
you  that  the  amount  of  the  commitment,  or  the  reason  for  the  com- 
mitment was  discussed  with  either  Mr.  Connally,  Mr.  Mitchel,  or  Mr. 
Dole? 

Mr.  LiLi>Y.  At  tbat  particular  conversation?  Is  tliat  what  you're  re- 
ferring to  ? 

[Mr.  Weitz  nods  in  the  affirmative.] 

Mr.  Lilly,  No.  I  have  nothing  in  my  notes,  and  he  did  not  indicate 
it  according  to  my  notes. 

Mr.  Weitz.  So  it  was  not  discus.sed.  and  therefore,  nothing  signifi- 
cant, or  at  least  Dr.  Mehren  related  to  you  nothing  significant  con- 
cerning a  discussion  of  commitments,  but  were  only  rather — or  the  rea- 


6118 

son  for  any  commitments  or  the  amount  of  any  commitments,  but 
rather  the  timing  to  satisfy  commitments  that  had  been  made? 

Mr.  Lilly.  True. 

Mr.  Weitz.  Did  he  in  any  way  indicate  that  either  Mr.  Connally 
or  Mr.  IVIitchell  or  Mr.  Dole  were  aware  of  the  fact  the  commitments 
had  been  made  or  the  amount  of  any  such  commitments  ? 

Mr.  Lilly.  Not  in  tliis  conversation  to  me. 

Mr.  Weitz.  Could  you  tell  us  what  else  was  discussed  between  you 
and  Dr.  Mehren  on  April  4  ? 

Mr.  Lilly.  Yes;  at  the  same  time  Dr.  Mehren  discussed  some  Com- 
mittee for  TAPE  checks  in  the  amount  of  $5,000.  There  would  be  30 
such  checks,  and  that  these  checks — at  this  time  he  called  John  Butter- 
brodt,  B-u-t-t-e-r-b-r-o-d-t,  AMPI  president. 

Mr.  Butterbrodt  was  attending  a  meeting  of  Mid-America  Dairy- 
men in  Wisconsin  at  this  time,  and  he  discussed  the  issuance  of  30 
TAPE,  or  Committee  for  TAPE  checks  in  the  amount  of  $5,000  each 
with  Mr.  Butterbrodt. 

And  at  the  same  time — I  only  heard  one  end  of  that  telephone 
conversation,  and  T  would  have  to  assume  that  Mr,  Butterbrodt  gave 
approval  because  in  time  the  checks  were  actually  written. 

But  Dr.  Mehren  also  insisted  in  my  presence — and  T  might  say 
that  Mr.  Nelson  was  present  at  this  conversation  as  well. 

Mr.  Weitz.  During  the  entire  conversation  ? 

Mr.  Lilly.  During  the  entire  conversation  on  April  4.  That  he 
wanted  to  talk  with  Mr.  Kalmbach.  And  Mr.  Nelson  attempted  to  dis- 
courage Dr.  Mehren  from  placing  a  call,  but  Dr.  Mehren  did  call 
Jake  Jacobsen  in  Austin  and  told  him  that  he  did  expect  to  talk  to 
Kalmbach.  And  within  a  few  minutes  Mr.  Jacobsen  called  back  and 
told  Dr.  Mehren  that  Mr.  Kalmbach  would  call  him  at  this  home 
that  night.  And  this  was  to  be  the  night  of  April  4. 

Then  Mr.  Nelson — and  I'm  looking  at  my  notes — asked  Dr.  Mehren 
what  he  expected  to  accomplish  by  talking  with  Mr.  Kalmbach.  Dr. 
Mehren  stated  that  he  wanted  Mr.  Kalmbach  and  all  Republicans  to 
know  that  AMPI  was  not  welching  on  our  commitment. 

Further,  Mehren  stated  he  expected  the  Justice  Department  to  slow 
down  its  antitrust  suit  against  AMPI  and  later  reduce  it  to  a  wrist  slap. 

Mr.  Weitz.  I^et  me  ask  you  something.  To  the  best  of  your  recollec- 
tion, didn't  you  have  a  conversation  before  April  4  with  Dr.  Mehren 
at  which  time,  he  discussed  with  you  the  results  of  the  March  meeting 
in  Washington?  And  to  tell  you  that  instead  of  the  substantial  contri- 
butions that  were  going  to  be  made,  some  relatively  nominal  contribu- 
tions of  $100,000  each  to  the  Republican  and  Democratic  Parties  for 
their  convention  programs  were  going  to  be  made? 

Mr.  Lilly.  Yes ;  there  was  prior  to  that  time. 

Mr.  Weitz.  Why  don't  we  take  a  break  for  a  minute? 
[A  brief  recess  was  taken.] 

Mr.  Weitz.  Just  to  start  again,  is  it  tiue  that  you  had  met  with  Dr. 
Mehren  before,  on  or  before  March  30,  1972,  and  at  that  time  had  dis- 
cussed the  conversation  and  meeting  that  he  had  had  with  Mr. 
(\mnally  ? 

Mr.  Lilly.  On  March  30,  1972,  my  notes  indicate  that  there  was  a 
TAPE,  a  Committee  for  TAPE  meeting  held,  at  which  time  it  was 
discussed  contributing  to  the  National  Democratic  Party  and  the  Re- 
publican Party. 


6119 

On  March  30  when  the  meetin<2:  of  the  TAPE  Committee  members, 
and  Dr.  Mehren  presented  the  thou^L^lit  and  the  idea  of  getting  approval 
of  contribiitino-  $100,000  to  the  Democrats  and  $100,000  to  the  Re- 
publicans to  be  nsed  to  helj)  bear  a  portion  of  tlieir  expenses*.  And  I 
mi<jht  say  that  there  is  coriespondence  from  both  the  Republican  na- 
tional headquartei's  and  the  Democratic  national  headtpiarters  cai-ry- 
in^  out  this  conversation,  that  they  anticipated  such  c(mti-ibutions  and 
would  certainly  welcome  them  to  help  pay  and  be  a  portion  of  the 
national  convention. 

Mr.  Weitz.  Yes.  Well,  in  that  connection  would  you  look  at  what  I 
will  identify  as  exhibit  No.  2S,  a  memorandum  from  Geor^je  Mehren 
to  John  Butterbrodt,  W.  R.  Griffith,  Melvin  R.  Besemer,  and  Robert 
Bonnecroy,  of  AMPI,  with  an  attached  letter  dated  March  16  to  Dr. 
Mehren  from  Robert  'Strauss,  chairman  of  tlie  Democratic  National 
Committee. 

Would  you  identify  that  for  us  ? 
^        [Whereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
N(\  'IS  for  identification.^] 

Mr.  Lilly.  Yes:  this  was  a  letter  dated  March  20,  1072.  These  were 
members  of  the  Committee  for  TAPE,  with  a  cover  letter  from  Dr. 
Mehren,  a  letter  of  transmittal  of  a  letter  dated  March  10,  that  he  had 
received  from  Robert  Strauss,  chairman  of  the  Democratic  National 
Committee,  indicating  some  discussion  about  purchase  of  100,000  con- 
l    vention  books  at  $1  ))er  book,  whicli  wDuld  .unoimt  to  $100,000. 
[        Mr.  Weitz.  Now,  T  have  what  T  shall  mark  as  exhibit  20,  which 
appears  to  be  a  cover  memo,  handwritten,  from  perhaps  (xeorfre  Meh- 
ren, but  you  will  identify  tliat  to  Bob  Lilly,  dated  March  20,  savings 
"Info,  please  return  to  me  with  Demo  letter  for  TAPE  jri'oup  here 
,    on  r,-HO"  and  tlie  attached  letter  of  Mairh  27  from  R.  L.  "Dick"  ITer- 
'    man  to  Di-.  Mehren.  And  it  is  on  stationery  from  the  Republican  Na- 
tional Convention. 

Would  you  identify  that  for  us  ? 

[Whereupon,  the  document  referred  to  was  marked  Lilly  exhibit 
No.  20  foi-  identificatioji.^] 

Mr.  T>iLLY.  Yes;  this  is  a  memo  from  Dr.  M<'hren  to  me  dated  3-20 — 

no,  1072,  but  it  would  be  in  1072.  Tt's  a  cover  letter,  or  the  letter  attached 

'    to  it  is  dated  1072.  And  he  was  keeping:  mc^  advised — we  discussed  the 

■     Democratic  letter.  Tliis  is  tlie  I\("i)ul)licaii  1ettei\  si<2:ned  by  R.  L.  "Dick" 

Herman,  no  title,  dated  March  27, 1072. 

And  it  indicated  that  Mr.  Ilennan  or  someone  had  talked  with  Mr. 

Strauss,  treasurer  of  the  Democratic  National  C\)nnnittee  and  were 

\    aware  of  n  purchase  of  a  number  of  our  convention  program  books. 

Mr.  Weitz.  "Our"  meaninc^  ? 

Mr.  LifJY.  "Our"  meaniji<>:  the  Re])ublican  Party  Convention  books 
at  their  upcoTriin^'  convention  to  be  held  in  1072,  and  copies  of  it  did  fjo 
to  Georirf^  Bristol.  Don  Tvendall.  Deke  DeliOach,  Josephine  Good. 

Mr.  Weitz.  Who  are  thosc^  people? 

Mr.  Lilly.  George  Bristol  T  can  identify.  He  was  an  employee  of 
the  National  Democratic  Party.  The  others  T  camiot  identify. 

Mr.  Weitz.  So  these  ai-e  the  coii-espondence.  Would  these  be  the  cor- 
respondence that  you  referred  to  representing  the  request  by  both  par- 
ties for  contributions  with  reirard  to  their  convention  booklets? 


1  Sep  p.  filSfi. 
-  See  p.  r.l80. 


6120 

Mr.  Lilly.  Right. 

Mr.  Weitz.  Now,  when  did  you  jfirst  learn  that  in  lieu  of  contributions 
to  the  Republican  Party  that  year  for  the  previous  commitment — in 
satisfaction  of  the  previous  commitment,  that  it  was  the  intention  of 
AMPI  and  TAPE  to  respond  to  these  letters  of  solicitation,  by  contrib- 
uting $100,000  each  to  the  Rejjublican  National  Convention  and  the 
Democratic  National  Convention  ? 

Mr.  Lilly.  Well,  on  March  80  the  Committee  for  TAPE  meeting  was 
held  and  approval  was  given  for  this  particular  action. 

Mr.  Weitz.  Did  Dr.  Mehren  tell  you  before  that  time  he  was  going 
to  request  such  action  as  a  result  or  as  a  followup  to  what  had  gone  on  in 
his  meetings  with  Mr.  Connally,  Mr.  Mitchell,  Mr.  Dole,  in  Washing- 
ton several  weeks  beforehand  ? 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  So  essentially,  you  had  learned  of  the  transactions,  what 
had  transpired  in  Washington  in  March  1972,  and  upon  Dr.  Mehren 's 
return  you  also  leaiTied  that  in  lieu  of  satisfying  some  commitments 
solely  to  the  Republican  Party,  for  the  time  being  TAPE  would  con- 
tribute to  each  of  the  two  parties  toward  the  cost  of  their  convention 
booklets  ? 

Mr.  Lilly.  That  is  true.  And  I  am  secretary  for  the  Committee  for 
TAPE,  and  I  think  that  he  would  haA^e  told  me  this  information,  that 
it  was  his  intention  to  discuss  it  with  the  committee. 

Mr.  Weitz.  Now,  getting  back  to  April  4  when  you  had  a  discus- 
sion with  Dr.  Mehren  and  Mr.  Nelson  was  present,  was  it  at  that  time 
then,  as  you  started  to  tell  us  before,  that  this  $150,000  contribution  to 
30  different  State  committees  of  the  Republican  National  Committee 
would  be  in  lieu  of  the  previous  decision  to  contribute  $100,000  to  each 
party's  convention  ? 

Mr.  Lilly.  Yes.  The  idea,  or  the  thought,  or  approval  given  to  the 
thought  of  contributing  the  $100,000  to  each  party  would  te  scrapped 
and  be  abandoned.  And  it  did  not  happen  in  fact. 

But  in  lieu  of  that,  $1.50,000  in  checks  of  $5,000  would  be  contrib- 
uted to  committees  of  the  Republican  Party. 

Mr.  Weitz.  Now,  was  it  your  understanding  that  that  $150,000 
would  be  toward  or  in  satisfaction  of  the  commitment  made  in  the 
previous  year  for  the  milk  price  support,  decision? 

Mr.  Lilly.  I  would  think  so,  because  he  had  discussed  this,  and  the 
commitments,  the  checks,  wer-e  made  out  in  a  similar  way  that  they  had 
been  in  1971.  There  had  been  discussions — to  direct  knowledge  for-  Dr. 
Mehren  to  have  said  to  me  that  this  is  a  portion  of  our  commitment; 
he  did  not.  But  this  is  an  assumption  on  my  part. 

Mr.  Weitz.  I  see. 

Now,  did  you  see  the  checks  that  were  drawn  up  ? 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  Were  those  checks  signed  ? 

Mr.  Lilly.  Yes,  they  were  signed. 

Mr.  Weitz.  Who  signed  them,  to  the  best  of  your  recollection  ? 

Mr.  Lir-LY.  Dr.  George  Mehren  and  Lynn  Elrod.  E-1-r-o-d, 

Mr.  Weitz.  Now,  what  Avas  Mr.  P^l rod's  position  ? 

Mr.  Lilly.  Mr.  Elrod  at  this  particular  time  was  actually  treasurer 
for  TAPE,  or  Committee  for  TAPE.  Both  of  them  were  in  existence 
at  this  time,  and  he  did  have  some  official  title.  Certainlv  he  was  one 


6121 

of  the — ^tliere  were  three  authorized  to  si^n  checks,  and  Mr.  Elrod 
was  one  of  the  three. 

Ml'.  Wettz.  Now,  I  have  marked  for  exhibit  30  what  appear  to  be 
copies*  of  30  checks  drawn  on  Citizens'  National  Bank,  each  dated 
April  4,  1972,  in  the  amount  of  $5,000,  signed  by  Dr.  Mehren  and 
Mr.  Elrod,  with  the  payee  left  blank,  with  the  word  "Void"  written 
across  the  face  of  each  of  the  checks.  And  on  the  same  page  of  each 
cneck,  a  Xeroxed  copy  of  each  check,  there  also  appears  to  be  a  blank 
copy  of  a  receipt  to  be  used  for  eacli  check. 

Would  you  look  at  these  and  tell  me  whether  those  are  in  fact  the 
checks  that  were  drawn  up  and  signed  ? 

[l^Hiereupon,  the  documents  referred  to  were  marked  Lilly  exhibit 
No.  30  for  identification.*] 

Mr.  Lilly.  Yes.  They  are  the  checks  that  were  drawn  up  and  signed 
that  day. 

Mr.  Weffz.  Now.  as  I  indicate  the  payee,  the  name  of  the  payee  is 
left  blank.  Can  you  tell  us  who  the  payees  were  to  be,  or  at  least  Avho 
Avas  to  }>rovide  the  names  of  the  payees  to  TAPE  ? 

Ml-.  Lilly.  On  Ai)rir  4,  1972,  during  the  convei-sation  with  Dr. 
Mehren,  Harold  Nelson,  and  myself  in  tlie  San  Antonio  office,  I  have 
notes  here  that  the  $5,000,  30  $5,000  checks,  the  names  to  be  furnished 
via  Kalmbach,  via  Connally,  question  mark.  One  of  the  two  were  to 
provide  the  names.  And  this  was  the  information  that  I  had. 

Further,  I  might  state  that  Mr.  Nelson — in  this  convei-sation  it  was 
discussed  that  he  was  to  deliver  these  checks  on  April  6.  "WHiere,  T  don't 
know — after  tlie  payees  had  l^een  provided. 

And  in  addition,  my  notes  also  indicate  there  was  discussion  that 
$100,000  from  Mid-America  was  to  be  delivered  by  Mr.  Nelsoii,  and 
that  Daii-ymen's  Inc.  would  conti'ibuto  $50,000.  ]My  notes  indicating  to 
me  that  $50,000  would  be  cont'-ibuted  and  delivered  by  Dairymen's  Inc. 
Mid-Amei'ica  has  a  political  arm,  as  well  as  does  Dairymen's  Inc. 

]Mr.  Weitz.  Now,  when  you  say  the  names  were  to  be  ]>rovided  by 
either  Mr.  Kalmbach  or  Mt-.  Connally,  question  mark,  do  you  know 
whether  anyone  contacted  Mr.  Connally  aftei-  the  meetings  in  Wash- 
ington in  March  1972? 

Ml-.  Lilly.  No,  I  do  not. 

Mr.  AYeitz.  But  you  do  know,  or  you  have  told  us  that  at  that  meet- 
ing with  Mr.  Nelson  and  Dr.  IVIehren  the  request  was  made  through 
Mr.  Jacobsen  that  Kalml)ach  be  contacted.  And  in  fact.  Mr.  Jacobsen 
called  back  and  said  tliat  Kalmbach  would  be  calling  Dr.  Mehren  that 
evening. 

Mr.  Lilly.  That  is  true. 

Mr.  Weitz.  Do  you  know  whether  in  fact  Dr.  Mehren  did  talk  to  Mr. 
Kalmbach  ? 

Mr.  Lilly.  No.  I  do  not  know. 

Mr.  AYeitz.  But  in  fact,  these  checks  which  were  drawn  and  dated 
April  4  were  voided  and  the  contributions  never  made? 

Mr.  Lilly.  Yes.  And  that  resulted,  according  to  Dr.  Mehren  having 
told  me  Air.  Kalmbacli  called  and  told  him  he  did  not  want  the  checks. 

Mr.  AYeitz.  AVho  told  you  that?  I'm  sorry. 

Mr.  Lilly.  Dr.  Mehren  told  me. 

*See  p.  6191. 


6122 

Mr.  Weitz.  When  did  he  tell  you  that? 

Mr.  Lilly.  At  alon^j;  about  the  same  time.  I  don't  have  it  in  mj'^  notes. 
But  the  checks — this  is  why  they  were  voided,  because  Mr.  Kalmbach 
called  and  said  he  didn't  want  it. 

Mr.  Weitz.  If  Mr.  Kalmbach  called  and  said  he  didn't  want  the 
checks,  do  you  have  any  idea  how  the  idea  to  contribute  the  $150,000 
possibly  in  this  manner  originated  in  April,  March,  or  April  of  1972? 

Mr.  Lilly.  Of  course,  there  had  been  a  convereation  between  Mr. 
Jacobsen,  Mr.  Nelson,  Dr.  Mehren  with  Mr.  Kalmbach  earlier,  either 
February  or  early  March  1972 — I'm  not  sure  of  the  date—in  Cali- 
fornia. And  I  have  no  notes,  but  I  don't  know  if  Mr.  Kalmbach  did  call 
Dr.  Mehren  here  or  not.  I  would  think — also  there  was  a  meeting  in 
the  mciantime  shortly  thereafter  with  Secretary  Connally ;  so  to  me,  the 
request  for  the  cliecks  could  have  come  from  either  place. 

Mr.  Weitz.  When  you  say  a  meeting  with  Secretary  Connally,  arc 
you  referring  then  to  the  meeting  in  March  of  1972? 

Mr.  Lilly.  Thafs  true.  So  the  time  frame,  the  meeting  with  Mr. 
Kalmbach,  a  meeting  with  Mr.  Connally,  within  a  month  of  each 
other. 

Mr.  Weitz.  "\^niat  I  don't  understand  is  this,  though.  After  the 
meeting  with  Mr.  Kalmbach  and  the  meeting  with  Secretary  Con- 
nally, both  of  which  would  have  been  finished  by  the  end  of  March 
1972,  at  that  time  you  were  told  by  Dr.  Mehren  that  contributions — 
they  were  going  to  go  slow  or  delay  contributions  until  the  end  of 
1972  just  before  the  election ;  and  that  instead,  they  would  make  con- 
tributions to  each  convention,  each  party's  convention.  Yet,  just  sev- 
eral days  later  they  were  again  talking  about  $150,000  plus  other 
moneys  for  the  other  co-ops,  and  no  contributions  to  the  two  conven- 
tions as  such. 

Mr.  Lilly.  That's  true. 

Mr.  Weitz.  Now,  can  you  account  for  that  change  or  possible  change 
in  decision  in  that  short  a  time  ? 

Mr.  Lilly.  No.  I  don't  know. 

Mr.  Weitz.  All  right. 

Now,  one  further  question  with  regard  to  these  checks.  I  notice 
the  last  four  checks  appear  to  be  smaller  in  size  and  a  somewhat  dif- 
ferent type  of  printed  check  than  the  first  26  checks.  I  wonder  if  you 
could  look  at  those,  which  will  be  checks  numbered  51  through  54  of 
exhibit  30,  and  tell  us  if  you  r-emember-  why  those  checks  are  diiferent, 
why  those  check  forms  are  diiferent. 

Mr.  Lilly.  Yes,  the  checks  are  different.  On  April  4  Dr.  Mehren 
told  me  that  they  had  run  out  of  checks,  the  size  check  that  this  par- 
ticular one.  the  35 — checks  Nos.  35  through  50,  and  they  needed  some 
additional  checks.  I  mean,  I'm  son-y,  check  25  on  exhibit  30.  And  he 
asked  me  to  call  Mr.  Jacobsen  and  to  deliver  some  additional  checks 
from  Austin,  Tex.  to  San  Antonio. 

I  did  call  Mr.  Jacobsen  and  at  about  4  p.m.,  at  about  4:30  a  Mr. 
John  Parker,  an  officer  at  the  Citizens'  National  Bank,  Austin,  Tex. 
called  me  and  told  me  that  a  Mr.  Dan  Wallace  from  the  bank  would 
be  in  San  Antonio  as  soon  as  he  could  and  deliver  the  checks.  At  about 
f)  p.m.  the  same  day  Mr.  Wallace  did  arrive  in  San  Antonio,  delivered 
the  four  checks  that  you  see  on  the  back,  that  are  smaller  in  size  and 
tliat  are  different  from  the  other  checks.  However,  they  are  made 
out  in  the  same  amount  of  $5,000. 


6123 

Mr.  Wettz.  All  right. 

And  you  don't  rocall — or  did  Dr.  Mehren  ever  t/cll  yoii  of  any  other 
face-to-face  meeting;?  with  Mr.  Kalmbach  that  he  might  have  had 
after  the  meeting  in  IjOS  Angeles  in  February  of  1972? 

Off  the  record. 

[Discussion  oif  the  record.] 

Mr.  Weitz.  Back  on  the  record. 

Mr.  Lilly.  My  notes  do  not  indicate  a  meeting,  but  I  am  of  the 
impression,  and  it  seems  that  I  had  a  conversation  with  Dr.  Mehren. 
That  at  the  March  1972  meeting  in  Washington,  D.C.,  where  Dr.  Meh- 
ren and  others  met  with  Secretary  Connally,  that  he  did  in  fact  meet 
with  Mr.  Kalmbach  in  AVashington,  D.C.  But  I  have  no  notes  to  verify 
this. 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Weitz.  Back  on  the  record. 

Mr.  Sanders.  If  I  am  going  over  something  we  have  covered  before, 
I  apologize,  but  I  don't  have  a  clear  understanding  of  what  Mehren 
told  you  at  any  point  in  time  alx)ut  his  February  1972  meeting  with 
Kalmbach. 

Mr.  DiLLY.  What  he  told  me  in  1972  ? 

Mr.  Sanders.  Yes. 

Mr.  Lilly.  In  February  of  1972  I  am  aware,  and  Dr.  Mehren  did 
tell  me  he  met  with  Mr.  Kalmbach.  I  have  also  read  a  deposition  that 
has  been  taken  by  Dr.  Mehren 

yir.  Nicholas.  From  Dr.  Meliren  ? 

Mr.  Lilly.  From  Dr.  Mehren,  in  the  Nader  lawsuit  versus  the  Secre- 
tary of  Agriculture.  And  there  was  discussion,  and  I  have  had  the 
privilege  and  opportunity  to  have  read  that  deposition,  as  to  their  dis- 
cussion in  California  in  February. 

Mr.  Sanders.  Now,  I  would  like  you  to  ignore  what  you  learned 
from  the  deposition  and  tell  me  v,hat  Dr.  Mehren  himself  at  any  point 
in  time  told  you  about  his  meeting  with  Kalmbach  in  February  of 
1972  ? 

Mr.  Lilly.  Dr.  Mehren  told  me  that  he  had  met  with  Kalmbach — he, 
INIr.  Jacobsen,  Mr.  Nelson,  and — can  I  go  off  the  record  for  a  minute  ? 

Mr.  Weitz.  Yes. 

[Discussion  off  the  record.] 

]Mr.  Weitz.  Back  on  the  record. 

Mr.  Lilly.  Following  his  meeting  with  Mr.  Kalmbach — and  I'm 
not  sure  of  the  date,  but  it  was  after  the  meeting— Dr.  Mehren  told  me 
that  they  had  met  Mr.  Nelson,  ]Mr.  Jacobsen,  and  himseU",  and  upon 
meeting,  ISIr.  Kalmbach  asked  him  when  in  the  hell  they  were  going  to 
give  them  the  money  that  thev  owed  th(>m. 

Mr.  Weitz.  Who  said  that  ? 

Mr.  liiLLY.  iNIr.  Kalmbach. 

Mr.  Nicholas.  In  order  that  the  record  be  clear,  and  this  is  on  the 
record,  are  you  talking  about  a  conversation  that  George  said  that  he 
had,  that  Dr.  Mehren  said  that  he  had  with  Kalmbach  later  after 
the 

Mr.  Lilly.  No.  This  was  thp  one  in  February  whore  they  had  gone 
to  California  and  met  with  him  ;  and  this  was  upon  his  return  prior  to 
having  gone  to  Washington. 


6124 

Mr.  Sanders.  Did  Mehren  tell  you  this  shortly  after  the  February 
1972  meeting? 

Mr.  IjUAjY.  Yes,  very  shortly. 

Mr.  Sanders.  Approximately  how  long  after? 

Mr.  Lilly.  I  don't  know  the  date  of  the  meeting,  but  it  would  have 
been  within  the  next  day  or  the  next  day  or  two.  Had  it  been  on  Fri- 
day, he  would  have  told  me  on  Monday.  Had  he  gotten  back  on  Tues- 
day, he  would  have  told  me  Wednesday.  T  mean,  it  would  have  be^n 
immediately  following. 

Mr.  Sanders.  Did  he  tell  you  this  in  the  presence  of  anyone  else? 

Mr.  Lilly.  Not  to  my  knowledge. 

Mr.  Sanders.  And  he  indicated  to  you  that  Nelson  and  Jacobsen 
were  present  at  that  meeting  with  Kalmbach  ? 

Mr.  Lilly.  Yes,  they  were  present  at  the  meeting. 

Mr.  Sanders.  And  it  happened  in  Los  Angeles? 

Mr.  Lilly.  I  would  assume  in  California. 

Mr.  Sanders.  In  California.  You  don't  know  whether  it  was  in  Los 
Angeles  or  not? 

Mr.  Lilly.  No.  I  don't  know  where  the  meeting  was. 

Mr.  Sanders.  A  few  days  after  Mehren  met  with  Kalmbach,  then 
Mehren  told  you  that  when  they  saw  Kalmbach,  Kalmbach  asked 
where  in  the  hell  was  the  money  they  owed  him. 

Did  they  use  the  term  "owed"  ?  Is  that  to  the  best  of  your  i-ecollec- 
tion? 

Mr.  Lilly.  To  the  best  of  my  recollection,  yes. 

Mr.  NiCHOi^\s.  His  statement  was  "When  in  the  hell  are  you  going 
to  give  us  the  money  that  you  owe  us."  Is  that  correct  ? 

Mr.  Lilly.  Right. 

Mr.  Sanders.  Now,  in  this  conversation  with  Mehren,  when  you  are 
being  told  that  fact,  t«il  us  anything  else  he  said  in  elaboration  of  that. 

Mr.  Lilly.  There  were  possibly  other  convereations  following  this. 
I  know  that  Dr.  Mehren  told  me  that 

Mr.  Sanders.  I'm  sorry.  Let  me  interrupt  vou. 

Mr.  Lilly.  OK. 

Mr.  Sanders.  On  that  day  when  you  first  learned  from  Mehren  of 
his  meeting  with  Kalmbach  a  day  or  two  earlier,  on  that  day  did  he 
give  you  any  elaboration  of  this  statement  by  Kalmbach  ? 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  rexjord.] 

Mr.  Lilly.  The  answer — there  was  another  statement  made.  Dr. 
Mehren  told  me  that  he  told  Mr.  Kalmbach  that  he  didn't  owe  him 
any  damn  money,  and  he  wasn't  going  to  pay  him  any. 

Mr.  Sanders.  Now,  I  would  like  you  to  continue  and  tell  me  to  the 
best  of  your  rexiollection  all  that  Mehren  told  you  on  that  day  about 
this  conversation  with  Kalmbach. 

Did  Kalmbach  then  come  back  and  respond  to  this  declaration  of 
Mehren's  ? 

Mr.  Lilly.  Ti*uthfully,  I  can  recall  that — no  doubt  there  were  other 
conversations — but  all  I  can  remember  that  Dr.  Mehren  told  me  on 
their  departure  that  Mr.  Kalmbach  was  rather  unhappy  with  him, 
and  he  was  rather  unhappy  with  Mr.  Kalmbach.  This  is  about  as  far 
as  I  can  elaborate  on  the  convei-sation,  even  though  I  know  that  there 
were  other  words  spoken  between  the  two  of  us  on  his  report  about 
this  meeting. 


6125 

Mr.  Sanders.  Do  you  have  any  notes  that  would  provide  an  elabo- 
ration on  this  conversation  between  Mehren  and  Kalmbach? 

Mr.  Lilly.  No.  I  do  not  have. 

Mr.  Sanders.  Did  Mehren  on  that  occasion  or  at  any  later  time  give 
you  a  better  understanding  of  what  Kalmbach  might  have  meant  by 
the  use  of  the  term  "owed''  ? 

Mr.  Lilly.  I  am  not  sure  that  he  elaborated  further  on  what  Mr. 
Kalmbach  indicated  by  the  word  "owed."  Tvater  there  were  meetings. 
Mr.  Kalmbach  seemed  to  have  moved  out  of  contact  insofar  as  Dr. 
Mehren  was  concerned,  and  Mr.  Nunn,  along  with  Mr.  Jacobsen, 
came  into  it,  and  at  that  time  I  have  some  notes  that  would  indicate 
what  he  meant  at  the  time. 

Mr.  Sanders.  Am  I  covering  something,  Alan,  that  you  have 
covered  ? 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Weitz.  I  do  have  one  or  two  more  questions.  They're  about 
this  conversation. 

Do  you  know  Mr.  Kalmbach  ? 

Mr.  Lilly.  I  have  never  met  him. 

Mr.  Weitz.  You  know  Dr.  Mehren  fairly  well,  I  take  it? 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  You  have  worked  with  him  at  least  several  years  ? 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  Is  he  prone  to,  when  he  gets  excited,  to  use  profanity, 
mild  profanity? 

Mr.  Lilly.  Either  excited  or  unexcited  he  is  prone  to. 

Mr.  Weitz.  So  his  response  of,  "I  don't  owe  you  any  damn  money, 
and  I'm  not  going  to  give  it  to  you,"  would  that  be  in  keeping  with 
perhaps  an  excited  response  on  his  part  to  the  type  of  language  he 
would  use  in  that  type  of  situation? 

Mr.  LiLi.Y.  I  think  it  would  be,  in  keeping  with  the  response  that 
he  would  give — not  an  excited  response  but  a  typical  response. 

Mr.  Weitz.  Now.  to  your  knowledge,  after  the  checks  which  we  have 
identified  as  exhibit  30  were  drawn  up  and  then  voided,  before  Octo- 
ber of  1972,  between  April  4  and  October  of  1972,  were  there  any 
other  contributions  made  by  the  Committee  for  TAPE  —  let  me  limit 
it  at  this  point,  and  we  will  get  to  the  others  later— but  at  this  point 
to  the  Republican  National  Committee  or  any  committee  on  behalf 
of  the  Presidents'  reelection  ? 

Mr.  Ln.LY.  No.  There  were  no  Committee  for  TAPE  checks  made 
to  the  best  of  my  rex^ollection.  And  I'm  without  the  advantage  of  my 
Committee  for  TAPE's  notes  in  front  of  me.  But  to  the  best  of  my 
recollection,  from  that  time  there  were  no  contributions  made. 

Mr.  Weitz.  Now,  did  there  come  a  time  in  October  1972  or  some  time 
late  in  1972  just  before  the  ele<?tion  when  you  were  told  of  further 
solicitations  by  representatives  of  committees  on  behalf  of  the  Presi- 
dent's reelection  to  Dr.  Mehren  and  other  representatives  of  AMPI  ? 

Mr.  Lilly.  Yes,  there  was.  I  was  told  by  Dr.  Mehren  of  a 

Mr.  Weitz.  Off  the  record. 

f  DiscuSvSion  off  the  record.] 

Mr.  Weitz.  Back  on  the  record. 

Mr.  Lilly.  On  the  23d  of  October  Dr.  Mehren  had  a  conversation 
with  me,  and  he  was  reporting  to  me  about  a  visit  on  Saturday,  Octo- 


30-337  O  -  74  -  18 


6126 

IxT  21  by  Mr,  Ximn.  T  don't  ]i<ave  liis  first  name;  and  T  have  him  as 
treasurer  of  the  Repiiblicfins  To  Re-Eleot  President  Nixon.  And  he 
liad  visited  Dr.  Mehren  in  San  Antonio  on  October  21, 1972. 

And  at  this  meetinjr  on  tlie  23d  wlien  Dr.  Mehren  was  relating  this 
conversation  to  me — T  have  some  notes  on  this  conversation,  and  it 
indicates  that  Mr.  Robert  Tsham  and  A.  L.  McWilliams  were  present. 
Tliey  may  or  may  not  have  been.  T  have  tlieir  names  on  a  note  to  the 
side.  And  I  don't  know  wliether  they  were  or  were  not  present. 

Rut  according  to  the  notes  that  I  liave,  Mr.  Nnnn's  visit  to  Dr. 
Mehren  was  to  solicit  contributions  to  reelect  the  President,  and  ISTnnn 
smrixested  alternatives  for  the  Committee  for  TAPE  to  contribute  on 
a  $750,000  oblicration  for  the  price  support.,  indicatin«x  this  would  «ro 
back  to  1071  price  support.  It  was  an  obliofation  created  at  that  time. 

And  these  were  words  that  were  used  by  Mr.  Nunn.  and  a^rain, 
related  to  me  by  Dr.  Mehren  of  a  meetinc:  2  or  3  days  before. 

So  Mr.  Nunn  had  in  his  mind  a  $750,000  oblitration,  and  he  sujj- 
irested  ways  the  Committee  for  TAPE  could  fulfill  this  comuntment  or 
oblifTfition.  And  by  contributinjr  to  the  Democrats  for  Nixon,  one ;  two, 
contribute  to  the  Committee  To  Re-Elect  the  President;  three,  con- 
tribute $325,000  to  the  Republican  Conp;ressional  Campaign  Commit- 
tee, and  $325,000  to  the  Repul)lican  Senate  Campaiiru  Committee. 

Those  two  fiofures  do  not  add  up  to  $750,000  but  this  was  from  the 
notes  that  T  did  take.  And  further,  my  notes  indicate  that  the  decision 
was  that  $150,000  was  contributed  to  the  House  Republican  Campainrn 
Committee,  and  $150,000  to  the  Senate  Republican  Campaicn  Com- 
mittee, which  did  in  effect  happen. 

Mr.  Weitz.  Now,  are  you  aware — you  say  it  did,  in  fact,  happen. 

Do  you  know  when  those  contributions  were  made  ? 

Mr.  Ltli.y.  On  or  about  this  time.  T  could  ^et  my  Committee  for 
TAPE  records  and  verify  the  date. 

Mr.  Weitz.  Well,  I  haniien  to  have  the  Committee  for  TAPE  records 
here,  the  report  filed  with  the  GAO,  dated  November  2,  1972,  as  re- 
ceived by  them.  Actually,  it  was  filled  out  and  signed  by  vou  on 
October '31,  1972. 

And  on  pa<re  10  of  schedule  D  of  that  report,  it  indicates  that  on 
October  27,  1972.  tliere  were  a  number  of  contributions  made,  includ- 
incf  $150,000  to  tlie  National  Republican  Senatorial  Camoaiofn,  with 
the  recipient  indicated  to  be  U.S.  Senators;  $150,000  to  the  National 
Republican  Concrressional  Camnaiijn.  and  the  recipient  is  indicated  to 
be  IT.S,  Conofre^smen ;  and,  in  addition,  $02,500  to  the  Democratic  Con- 
fifressional  Campaiofu  Committee,  with  the  recipient  desio-nated  as  U.S. 
Congressmen ;  $25,000  to  the  National  Republican  Campaia^n  Com- 
mittee, with  the  recipient  indicated  to  be  IT.S.  Conjrressmen  ;  $27,500  to 
the  National  Republican  Senatorial  Camipaicrn  Committee,  with  the 
recipient  indicated  to  be  U.S.  Senators;  and  $47,000  to  the  Democratic 
Senatorial  Campaiofu  Committee,  with  the  recipient  indicated  to  be 
U.S.  Senators. 

Now.  would  you  look  at  that  report,  which  is  si<rned  bv  vou,  and  tell 
me  whether  that  is  correct,  to  the  best  of  your  recollection? 

Mr.  Ltepy.  Yes,  it  is  correct,  to  the  best  of  mv  recollection. 

Mr.  Wettz.  Off  the  record. 

[Discussion  off  the  record.] 


6127 

Mr.  Wettz.  Now,  with  regard  to  these  contributions,  obviously  we 
are  not  interested  in  exploring,  since  it  is  outside  the  mandate  of  the 
committee,  contributions  that  were  strictly  to  non-Presidential  candi- 
dates in  the  1972  election. 

However,  this  report  and  the  particular  contributions  I  have  men- 
tioned indicate  that  there  were  contributions  to  Democratic  Congress- 
men, or  Democi'atic  congressional  committees  and  a  Democratic  sen- 
atorial committee,  and  there  were  separate  contributions  to  a  Republi- 
can senatoi'ial  committee,  and  a  Republican  congressional  committee, 
but  then  two  other  contributions  on  the  same  dfte  to  Republican 
senatorial   and  to  Republican   congressional   committees. 

Now,  you  have  indicated,  I  take  it  from  your  testimony,  that  the 
$150,000  contributions,  each  to  the  Republican  Senatorial  and  Re- 
publican Congressional  Campaign  Committees,  were  the  result  of  the 
meeting  between  Dr.  Mehren  and  Mr.  Nunn  in  October  of  1972,  as  an 
alternative  to  Presidential  contributions  as  a  satisfaction  of  the  com- 
mitment foi"  the  price  support. 

Now,  let  me  ask  you  simpl}^  this :  In  addition  to  the  facts  you  have 
alieadj^  related,  do  you  know  anything  about  the  $150,000  to  the  Re- 
publican Senatorial  Campaign  Committee  and  the  $150,000  contribu- 
tion to  the  Republican  Congressional  Campaign  Committee  that  is  not 
otlierwise  indicated  on  the  face  of  this  report  ? 

Mr.  Nicholas.  One  second  off  the  record. 

Mr.  Weitz.  Off  the  record. 

I  Discussion  off  the  record.] 

Mr.  Weitz.  Back  on  tlie  record. 

Mi-.  Liley.  Yes;  there  was  some  significance.  The  original  termina- 
tion of  my  discussion  with  Dr.  Mehren,  there  had  been  some  discus- 
sion with  the  Committee  for  TAPE  members.  I  don't  remember  if  it 
was  a  telephone  meeting,  or  if  it  was  a  meeting  in  pei'son,  but  it  was 
detei-mined  that  $25,000  each  would  be  given  to  the  Democrats  and  the 
Republicans,  both  on  the  Senate  side  and  the  House  side,  making  a 
total  of  $100,000. 

There  wei-e  some  of  the  moneys  obligated  over  and  above  that  to 
particular  candidates,  either  Republicans  or  Democrats,  and  some  of 
those  checks  would  be  an  increased  amount  over  and  above  that  to 
cover  some  of  those  commitments  to  individuals  that  we  said  we  would 
contribute  to,  and  we  did  contribute. 

On  the  check  in  the  amount  of— what?  $62,000  to 

Mr.  Weitz.  $500. 

Mr.  LiLi.Y.  $62,500.  I  had  a  conversation  with  Senator  Dole  on  that 
myself. 

Mr.  Weitz.  That  was  to  the  Democratic  congressional  campaign? 

Mr.  Lilly.  All  right. 

"Wliat  was  the  one  to  the  Republican 

Mr.  Weitz.  Senatorial  or  congressional  ? 

Mr.  Lilly.  Senatorial. 

Mr.  Weitz.  Well,  there  are  two.  There  is  one  for  $150,000  and  one 
for  $47,000— no,  $27,500. 

Mr.  Lilly.  $27,500.  There  was  to  have  been  $25,000,  and  then  it  was 
increased  $2,500  over-  and  above  that.  I  am  not  sure  who  the  money  was 
earmarked  for,  but  I  can  get  the  information  for  you. 

Mr.  Weitz.  Well,  I  don't  think  that  is  germane  to  our  inquiry. 


6128 

Mr.  Lilly.  Well,  I'm  getting  into  the.  other— the  $150,000  checks  to 
the  Republicans,  House  and  Senate,  Senator  Dole,  in  my  conversation 
with  him — and  this  was  at  about  the  time  he  learned  the  checks  had 
arrived  in  Washington — was  most  unhappy,  because  he  had  no  knowl- 
edge of  this  particular  thing  happening  at  all,  and  we  had  rather 
a  heated  discussion  beLNVten  the  two  of  us. 

I  first  started  off  talking  with  his  administrative  assistant,  Mr.  Tag- 
gart.  And  the  moneys,  I  believe,  if  this  were  pursued  far  enough,  it 
would  be  found  and  determined  that  these  moneys,  in  effect,  actually 
went  into  the  Re-Elect  Nixon  Campaign  Conmiittec  from  both  the 
House  and  the^  Senate  from  the  Republicans  from  the  two  $150,000 
checks,  but  we  reported  it  as  a  contribution  as  we  made  it. 

A  cover  letter  went  along  with  it.  Normally,  I  would  write  a  cover 
letter.  In  this  instance.  Dr.  Mehren  wrote  the  cover  letter  that  did 
accompany  the  checks  to  the  committee.  It  clearly  states  there  is  no 
commitment,  you  can  do  what  you  want  to  with  the  checks. 

This  is  an  unusual  procedure,  because  99  percent  of  the  letters  of 
transmittals  are  over  my  signature. 

Air.  Weitz.  Well,  had  you  not,  in  fact,  refused  to  be  associated  with 
this  contribution? 

Mr.  Lilly.  I  certainly  had  withdrawn  and  refused  to  have  any  part 
to  do  with  it.  That  is  the  truth. 

Mr.  Weitz.  When  Mr.  Dole  called,  you  said  he  was  upset  ? 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  Would  he  normally  have  l)een  upset  if  he  learned  that 
the  committee  for  TAPE  had  just  made  a  $300,000  contribution  to  the 
Republican  Senate  and  congressional  committees? 

Mr.  Lilly.  He  was  upset— that  was  one  of  the  reasons  he  was  upset. 
And  he  was  upset,  too 

Mr.  Weitz.  I'm  sorry.  AVliat  was  one  of  the  reasons  he  was  upset? 

He  had  just  received  $.300,000  ? 

Mr.  Lilly.  He  was  upset  that  he  had  no  knowledge  of  it  coming  in. 

Mr.  Weitz.  So  he  was  surprised  ?  ' 

Mr.  Lilly.  As  the  chairman  of  the  Republican  campaign  commit- 
tee, here  was  $300,000  coming  in,  and  he  had  been  in  conversation  with 
Dr.  Mehren,  he  had  been  in  conversation  with  me;  he  had  no  knowl- 
edge of  it,  and  he  was  rather  irritated  that  he  had  not  be^n  informed 
that  it  would  come  in.  And  he  was  happy  to  receive  it. 

But  I  think  what  he  was  really  upset  about  was  because  we  had — 
he,  too,  at  about  the  same  time  the  report  went  in,  he  had  an  opportunity 
to  look  at  the  report,  and  we  contributed  some  money  to  some  Demo- 
crats and  some  money  had  been  contributed,  and  we  got  off  on  a  dis- 
cussion about  Kansas  politics,  between  the  two  of  us. 

l^iit  his  real  upset — he  was  really  upset  because  he  felt  the  money 
would  not  be  of  any  l)enefit  to  come  in  that  late,  him  not  knowing  about 
it,  where  would  it  go,  what  Senators  would  be  the  recipients  of  it,  and 
how  would  it  really  help  them  to  get  them  reelected.  And  this  was 
rather  late  in  the  campaign,  and  this  was — I  think  he  had  some  inkling 
in  his  mind,  even  though  this  was  not  said,  that  the  money  might  not 
be  available  for  senatorial  candidates. 

Mr.  Weitz.  Did  he  say  that  ? 

Mr.  Lilly.  No;  he  did  not.  I  said  I  think  that  he  might  have  liad  an 
inkling  in  his  mind.  He  did  not  say  it. 


6129 

Mr.  Weitz.  I^t  me  ask  you  in  general,  when  TAPE  or  committee 
for  TAPE  within  your  experience  had  made  contributions  to  Repub- 
lican or  Democratic  senatorial  or  congressional  committees,  was  the 
money  usually  earmarked  for  particular  recipients,  particular 
candidates  ? 

Mr.  Lilly.  Some  of  it  would  be,  yes.  I  think  you  will  find  one  made 
to  the  senatorial,  Democratic  senatorial  campaign  committee  in  the 
amount  of  $25,000,  and  I  believe  you  will  find  that  was  earmarked 
for  Ed  Edmondson  from  Oklahoma.  And,  of  course,  at  that  time  or 
at  a  time  earlier,  I  am  not  sure,  it  might  not  be  in  that  particular  re- 
port ;  it  might  be  in  another  report,  some  of  the  moneys,  generally — 
you  have  one  there  for  $27,500 ;  that — $2,500  of  that  was  earmarked. 
The  balance  of  it  was  not  earmarked.  Usually,  there  might  be  some 
portion  of  it,  but  only  a  small  portion  of  it. 

Mr.  Weitz.  All  right. 

So  that,  to  the  best  of  your  knowledge,  the  transmittal  letter  said 
there  were  no  strings  attached  and  the  money  was  not  earmarked? 

Mr.  Lilly.  True. 

Mr.  Weitz.  Mr.  Dole  did  not  expressly  say  that  he  knew  he  wasn't 
going  to  have  the  benefit  of  that,  or  no  particular  Republican  sena- 
torial, congressional  candidates  were  not  going  to  have  the  benefit  of  it  ? 

Mr.  Lilly.  That's  true. 

Mr.  Weitz.  And,  in  fact,  tlie  only  basis  you  have  is  the  conversation 
as  related  to  you  between  Dr.  Mehren  and  Mr.  Nunn  ? 

Mr.  Lilly.  Right. 

Mr.  Weitz.  About  the  reason  why  $300,000  would  be  contributed? 

Mr.  Lilly.  Thafs  true. 

Mr.  Weitz.  Do  you  have  any  idea  how,  if,  in  fact,  that  money  was 
to  go  to  the  President,  it  would  have  been  taken  out  of  those  commit- 
tees or  somehow  transferred  to  the  Committee  To  Re-Elect  or  some 
other  committee  on  behalf  of  the  President  ? 

Mr.  Lilly.  I  have  no  idea  beyond  that. 

Mr.  Nicholas.  May  I  ask  a  question  off  the  record  before  we 
leave  that  point  now  ? 

Mr.  Weitz.  Certainly. 

[Discussion  off  the  record.] 

Mr.  Weitz.  Let's  go  back  on  the  record. 

I  have  just  several  more  questions  about  these  contributions. 

First,  let's  take  those  two  contributions  to  the  National  Republican 
Senatorial  Campaign  Committee. 

Now,  one  was  of  $150,000  on  that  day,  and  one  was  for  $27,500. 
Similarly,  there  were,  as  I  indicated,  two  contributions  on  the  same 
date  to  the  National  Republican  Congressional  Campaign  Committee, 
one  of  $150,000,  one  of  $25,000. 

Is  there  any  reason  you  can  recall,  or  any  explanation  you  can 
give,  why  a  total  contribution  was  apparently  broken  down  into  two 
checks  each  to  the  Republican  Senatorial  Campaign  Committee  and  the 
Republican  Conarressional  Campaign  Committee? 

Mr.  Lilly.  Well,  part  of  the  reasofis  for  the  breaking  down  of  the 
contributions,  some  of  the^ — in  totaling  the  contributions  that  we  had 
made  during  the  year  of  1972  to  Democratic  candidates  and  Republi- 
can candidates,  this  would  pretty  well  balance  out,  total  contributions, 
equal  contributions,  to  the  two  parties. 


6130 

Mr.  "Weitz.  Would  that  include  the  $150,000  contributions? 

Mr.  Lilly.  That  would  include  those  two  contributions  of  $150,000 
each. 

I  think,  if  you  would  total  the  fi^ire.s  for  the  year  of  1972,  you 
would  find  Iie[)ublicans,  total  contribution  to  Republicans,  would  total 
slightly  more  than  those  to  the  Democrats,  but  it  was  equal — I  mean, 
fairly  well  equal. 

Mr.  Weitz.  But  is  there  any  sigrnificance  to  having  two  checks  to 
the  same  committee  on  the  same  day  ? 

Mr.  Lilly.  Yes,  because — maybe  I've  testified  to  this — but  one  of 
the  checks,  the  smaller  of  the  two  checks  to  the  senatorial  committee, 
was  as  a  result  of  a  discussion  with  Senator  Dole,  who  then  was  the 
chairman  of  the  Republican  Party.  The  other  had  been  a  discussion 
outside  and  away  from  Senator  Dole,  evidently,  and  Dr.  Mehren  had 
had  discussions  v^•ith  someone  outside  of  my  knowledge  to  make  those 
two  contributions  of  $150,000.  So  he  originated  that,  insofar  as  I  am 
concerned. 

Mr,  Weitz.  He  meaning  Dr.  Mehren  ? 

Mr.  Lilly.  Dr.  Meliren.  The  two  for  $150,000. 

Mr.  Weitz.  Well,  when  you  say  someone  outside  of  your  knowledge, 
would  this  be  Mr.  Nunn,  or  are  you  suggesting  in  addition  to  Mr. 
Nunn  ? 

Mr.  Lilly.  I  am  suggCvSting  possibly  Mr.  ?funn,  because  he  had 
been — had  recently  contacted  Dr.  Mehren,  and  I  would  say  it  would 
have  been  as  a  result  of  his  visit. 

Mr.  Jacobsen  also  knew  Mr.  Nunn  and  had  contacted  him  about 
the  same  time. 

Mr.  Weitz.  Are  you  saying  the  only  reason  for  two  checks  to  each 
of  the  two  committees  on  the  same  day  was  that  one  $150,000  con- 
tributio?!  had  l)een  arrived  at  as  a  result  of  negotiations  with  one  per- 
son, and  the  other  $27,500  was  the  result  of  negotiations  with  a  se-cond 
pei-son  ? 

IVfr.  Lilly.  That's  true. 

Mr,  Weitz.  T  have  no  further  questions  on  this  matter.' 

Mi-.  Sanders? 

Mr.  Sanders.  Yes,  please. 

Off  the  record. 

[Discussion  off  the  record.] 

Mr.  S.\xnET{S.  Tlie  GAO  repoi-t  of  October  81,  that  we  have  been 
makinsT  reference  to,  indicates  contributions  to  various  Republican 
committees  in  the  total  of  about  $352,000,  and  to  the  Democratic 
committees  in  the  total  of  about  $100,000. 

There  is,  then,  a  considerable  disparity  between  those  two  totals. 

Mr.  TjIi>ly.  True. 

Mr.  Saxders.  Are  you  savins:,  nevertheless,  that  other  contributions 
made  at  othei-  times  of  the  vear  would  t^nd  to  make  the  Republican 
and  Democratic  contributions  more  equal,  so  that  the  Republican 
contributions  only  slightly  exceed  those  that  Avere  made  to  the 
Democrats? 

Mr.  Lilly.  Yes.  for  the  e)itii-e  calendar  year  of  1972,  that  would  be 
true. 

Mr.  Saxders.  >\nd  are  vou  i-oferrin.of  to  contributions  made  by 
TAPE  onlv? 


6131 

Mr.  Lilly.  By  committee  for— well,  TAPE  in  the  earlier  part  of 
1972,  for  January,  February,  and  March.  And  then  committee  for 
TAPE,  the  successor  of  TAPE ;  the  two  combined  would  total  that. 

Mr.  Sanders.  In  making  such  a  remark,  you  are  not  contemplating 
any  funds  that  would  have  been  made  available  by  AMPI.  as  opposed 
toTAPEorCTAPE? 

In  talking  about  the  comparability  of  funds  given  the  Republicans 
and  Democrats,  you  are  not,  then,  taking  into  consideration  any  funds 
which  might  have  been  made  available  from  AMPI  resources,  separate 
and  apart  from  TAPE  or  CTAPE  ? 

Mr.  Lilly.  To  my  knowledge,  in  1972,  if  this  is  the  year  you  are  re- 
ferring to 

Mr.  Sanders.  I  am. 

Mr.  Lilly  [continuing].  I  am  not  aware  of  any  AMPI  funds  from 
my  knowledge  that  went  in,  corporate  funds,  so  to  speak,  that  went 
into  either  the  Republican  or  the  Democrats. 

Mr.  Sanders.  All  right. 

Are  you  also  not  taking  into  consideration  any  contributions  that 
were  made  by  Dairymen's,  Inc..  or  Mid-America  in  talking  about 
comparability  of  contributions? 

Mr.  Lilly.  I  have  no  idea  of  what  moneys— I  know  of  some  contri- 
butions they  have  made,  but  totals,  what  they  had  to  contribute — ^they 
might  have  contributed  the  balance  between  Democrats  and  Republi- 
cans, I  don't  have  that  information  or  knowledge. 

Mr.  Sanders.  You  have  made  mention  on  a  couple  of  occasions 
of  a  $750,000  commitment. 

Is  it  your  understandinir  that  this  much,  or  approximately  this 
much,  was,  in  fact,  paid  to  the  Renublicans  in  1972,  or  are  you  speaking 
of  that  as  a  total  paid  to  Republicans  and  Democrats  in  1972? 

Mr.  Lilly.  No;  I  am  speaking  to  the  commitment.  I  think,  is  a 
cai'i'vover  from  1971,  the  year  in  which  the  price  support  was  increased. 
And  when  I  refer  to  commitmeiit  of  $750.000 — and  I  have  mentioned 
several  figui-es,  because  I  truthfullv  don't  know  the  amount  of  the 
commitment — but  the  $750,000  that  I  referred  to  in  1972  was  a  carry- 
over from  1971  commitments  that  was  to  have  been  made  either  in  1971 
or  1972,  either  to  complete  the  total  commitment,  whatever  it  was,  or 
because  in  1971.  wp  did  contribute  $187,500  in  a  series  of  $2,500  checks. 

And  if  you  add  that  $200,000.  and  if  von  add  $750,000,  when  we  talk 
about  commitments  you  (ret  close  to  $1  million  again. 

Mr.  Saxofrs.  Off  the  record. 

TDisf^nssion  off  tlip  record.] 

Mr.  Sanders.  Pnck  on  the  record. 

The  October  .SI  G.VO  renort  mentions  a  $62,500  contribution  to  the 
Democratic  Con.q-res'^ional  Campaififn  Committee. 

Do  vou  havp  knoAvledqre  of  any  earmarking  of  those  funds? 

Mr.  T,TLT,Y.  There  Avas  some  earmarkin<T  in  those  particular  amounts 
of  funds.  I  do  not  have  tho.se  records  with  me,  but  I  could  ffet  them. 

Mr.  Sanders.  Do  vou  have  knowledge  that  any  of  the  persons,  to 
^vhom  thosp  funds  mififht  have  been  earmarked,  had  anv  involvement 
in  thp  AMPI  pffort  to  jrpuerate  legislation  for  milk  supports? 

Mr.  Lilly.  That  nuestion  I  ran  answer  if  vou  will  give  me  time  to 
get  m v  notes,  and  T  don't  have  those  jiotps.  T  do  have  the  information  to 
answer  your  question.  I  don't  know  if  it  did  or  would  have  included 


6132 

people  that  supported  us  in  our  efforts  in  1971  to  introduce  legis- 
lation on  the  price  support  or  not,  without  referring  back  to  the  notes. 

Mr.  Sanders.  Witliout  referring  to  your  notes,  can  you  state  whether 
any  of  that  earmarking  was  to  fulfill  any  obligation  to  any  persons 
in  the  Plouse  for  their  assistance  in  the  milk  legislation? 

Mr.  Lilly.  The  commitments,  or  the  earmarking  that  I  made  and 
that  I  was  responsible  for  and  caused  to  be  committed  within  a  lump- 
sum contribution,  had  no  relation.  I  did  not  make  all  the  decisions 
about  the  earmarking,  and  so  there  might  have  been — this  would  have 
been  someone  else  within — Dr.  Meliren,  it  could  have  been  the  influ- 
ence of  Harold  Nelson  relating  it  through  to  Dr.  Mehren.  It  could 
have  been  someone  else  in  our  organization  making  the  commitment. 

But  the  portions  that  I  had  any  involvement  in  were, — no  commit- 
ments made  from  carryover  from  1971,  either  to  the  Republicans  or 
the  Democrats. 

Mr.  Sanders.  And,  then,  as  to  w^hether  any  persons  who,  for  whom 
these  funds  were,  indeed,  earmarked  might  have  had  some — might 
have  been  involved  in  the  milk  legislation,  you  would  have  to  refer  to 
your  notes? 

Mr.  Lilly.  Yes;  I  would. 

Mr.  Sanders.  And  can  you  do  that  and  so  advise  us  ? 

Mr.  Lilly.  Yes;  I  can.  I  sure  will. 

Mr.  Nicholas.  May  we  send  them,  or  could  we  call  Alan  and  arrange 
to  mail  those  to  you  so  that  you  could  have  the  accurate  figures  that 
he  lias  in  his  notes — that  Bob  has  in  his  notes? 

Mr.  Weitz.  That  would  be  fine. 

Mr.  Nicholas.  Now,  that's  for  the 

Mr.  Weitz.  Contributions  on  the  27th. 

Mr.  Sanders.  $62,500  to  the  Democratic  Congressional  Campaign 
Committee. 

And  the  question  is  whether  any  of  those  were  earmarked  to  Mem- 
bers of  the  House  who  had  provided  any  support  for  milk  legislation. 

Mr.  TviLLY.  You're  only  interested  in  the  one? 

Mr.  Sanders.  No.  Now  I  am  going  to  the  $47,000  to  the  Democratic 
Senatorial  Campaign  Committee.  I  would  ask  the  same  series  of 
questions  as  I  have  iust  asked  you  for  the  House. 

Is  vour  answer  the  same,  that  vou  need  to  refer  to  vour  notes  on 
that  also? 

Mr.  Lilly.  Yes;  it  is,  on  all  of  those. 

Mr.  Sanders.  So  then  I  would  ask  also  for  you  to  advise  us,  after 
checkinir  your  notes  on  that. 

Mr.  Nicholas.  Well,  you  want  to  kiiow,  actually,  then,  what  his 
notes  reflect  as  to  whether  or  not  any  of  those  moneys  were  earmarked, 
any  of  the  contributions  were  earmarked,  to  any  individual  for  any 
assistance  they  may  have  given  in  the  price  support  increase? 

Mr.  Sanders.  True.  Except  he  is  saying  that  he  has  no  knowledge 
that  it  was  given  for  any  such  assistance. 

So  then  what  we  are  reduced  to  is  providing  the  names  of  any  per- 
sons that  were,  in  fact,  instrumental  in  the  milk  legislation,  whether 
it  resulted  from  a  commitment  to  them  or  not. 

Mr.  Lilly.  Yes.  It  would  be  a  matter  of  earmarking  any  moneys 
that  might  have  been  earmarked,  to  point  those  out,  and  at  the  same 
time  point  out  if  that  particular  individual  might  have  introduced 
legislation  in  1971  in  regard  to  the  price  support. 


6133 

Mr.  Sanders.  Yes.  Not  only  intTOdnced  legislation,  but  took  any 
active  support,  any  active  support  toward  the  enactment  of  that  leg- 
islation. He  might  not  have  cosponsored  a  bill,  but  he  might  have  had 
some  other  activity  on  your  behalf,  such  as  making  a  speech  on  the 
floor  of  the  House,  speaking  out  publiclj^  in  favor  of  the  legislation. 
Presumably,  he  would  have  also  cosponsored  the  legislation,  but  not 
necessarily. 

Mr.  Lilly.  All  right. 

Mr.  Sanders.  Could  you  explain  to  me  in  a  little  more  detail  this 
letter  you  mentioned  which  went  as  a  cover  letter  in  relationship  to 
the  two  $150,000  contributions  ? 

Was  that  a  letter  signed  by  Dr.  Mehren  ? 

Mr.  Lilly.  Yes,  it  is. 

Mr.  Sanders.  Who  was  it  addressed  to  ? 

Mr.  Lilly.  Oh,  it  would  be  addressed  to  the — I  don't  know  the  name. 
It  would  be  the — what  would  it  be  ?  The  chairman  of  that  particular 
committe^^  within  the  Republican  ranks,  both  in  the  House  and  the 
Senate,  and  they  do  have  such  a  committee.  It  would  probably  be 
addressed  to  the  chairman  of  that  particular  committee. 

Mr.  Sanders.  Do  you  think  that  these  funds  were  sent  by  mail,  as 
opposed  to  personal  delivery  ? 

Mr.  Lilly.  Yes ;  because  I  have  seen  the  letter  of  transmittal,  and — 
I  would  have  to — I  know  that  I  did  not  deliver  them.  I  would  assume 
that  they  were  sent  by  mail ;  tliey  were  not  picked  up. 

Mr.  Sanders.  Have  you  furnished  us  a  copy  of  that  letter  ? 

Mr.  Lilly.  No. 

Mr,  Sanders.  You  don't  have  a  copy  of  it  ? 

Mr.  Lilly.  Yes ;  I  do  have,  in  the  TAPE  files ;  I  don't  have  it  with 
me,  but  in  the  committee  for  TAPE  files,  yes,  I  can  produce  tjie  letter. 

Mr.  Sanders.  Alan,  don't  you  think  we  need  that? 

Mr.  Weitz.  Well,  I  have  a  general  comment  about  all  of  this,  but 
I  tliink  you  are  certainly  welcome  to  ask  for  it. 

You  are  talkinff  about  this  as  a  transmittal  letter  for  all  of  these  ? 

]\rr.  Sanders.  For  the  $150,000. 

Mr.  Weitz.  Yes. 

Mr.  Sanders.  Don't  you  think  we  should  have  that  ? 

Mr.  Weitz.  Yes. 

Mr.  Sanders.  I  would  lilve  a  little  better  understanding  of  why 
you  did  not  want  anything  to  do  with  the  payment  of  the  two  $150,000 
increments  to  the  Senate  and  congi'essional  campaign  committees? 

What  thinking  was  in  your  mind  at  the  time? 

Mr.  Lilly.  Well,  this  goes  back  to — and  I  will  have  to  go  back 
to  1971.  March  of  1971.  Of  course,  what  limited  experience  I  have 
had  in  the  field  of,  working  in  the  field  of  legislation,  I  opposed  at 
the  time  the  direction  and  the  effort  that  Mi'.  Nelson  was  going  in, 
an  effort  to  try  to  go  through  the  administration  to  get  a  price-support, 
increase — ^meaning  the  Department  of  Agriculture  or  any  other 
administration. 

A  great  deal  of  effort  had  been  spent  up  on  the  Hill,  contacting 
Senators  and  Congressmen,  a  lot  of  them  that  are  friends,  acquaint- 
ances, that  I  worked  with,  that  T  oot  to  introduce  legislation.  We  had 
other  people  come  in  from  the  far  reaches  of  the  TTnited  States  to 
contact  their  Congressmen  and  Senators.  We  had  in  the  neighbor- 
liood  of  150  Congressmen  and  Senators;  we  were  well  on  the  way  to — 


6134 

in  my  projection — we  would  have  had  at  least  50  percent  of  the  House 
and  50  percent  of  the  Senate  that  wouhl  have  introduced  it. 

To  have  cut  across  this  whole  palh  and  find  some  other  avenue 
to  get  price-support  increases  when  you  have  had  a  Congressman 
or  a  Senator  to  have  introduced  a  bill  and  be  on  record  to  the  possibility 
of  increasing  the  price  of  milk  to  the  consumer  back  home,  but  none- 
theless he  was  conv^inced  enough  of  the  merits  of  our  case  that  he  did 
introduce  legislation,  and  I  think  that  we  should  have  continued  the 
legislative  route. 

I  ain  convinced — and  I  told  Mr.  Nelson.  1  told  ISIr.  Parr.  I  told 
Dr.  ]Mehrcn,  I  told  Marion  ITairison,  I  told  Jake  Jacol)sen,  during 
this  conversation  that  we  could  pass  it.  Possibly  it  would  be  vetoed. 
I  doubt  if  we  had  the  votes  to  override  a  veto,  but  in  future  years 
we  Avould  have  more  friends  in  Congrt^s  through  having  gone  this 
route  and  forgetting  this  other  route  than  we  ever  would  have. 

And  this  is  why,  from  the  year  of  1971,  that  I  removed  myself  as 
much  as  T  could  from  this  entire  operation,  because  I  had  a  great  deal 
of  falling  out  with  Mr,  Nelson  over  it.  Dr.  Mehren  picked  it  up  and 
discussed  it;  I  agreed  no  further  with  Dr.  Mehren  than  I  did  with 
Mr.  Nelson  on  it,  even  though  I  worked  for  him  and  worked  in  this 
particular  capacity. 

I  don't  know  if  I  have  been  responsive  to  your  question  or  not,  but 
it  is  a  feeling  that  I  have  in  what  limited  experience  that  I  have  had. 

Mr.  Sanders.  Well,  I  have  gained  the  impression  that  you  must 
have  felt  there  was  sometliing  more  sei'iously  wrong,  besides  a  mis- 
take in  strategy. 

And  surely,  through  the  years,  you  have  had  differences  of  opinions 
with  persons  whom  you  worked  over  strategy,  but  which  did  not  re- 
sult in  your  disassociation  with  their  activities? 

Mr.  Lilly.  That's  true. 

Mr.  Sanders.  Did  you  have  a  feeling,  or  did  you  have  facts  within 
your  knowledge  that  there  was  something  unlawful  or  seriously  im- 
proper about  this  contribution,  and  what  was  that  knowledge? 

Mr.  Lilly.  Well,  I  think  I  would  back  up  a  little  bit  farther  on 
something  that  is  not  a  matter  of  record  here,  but  to  1968,  to  be  re- 
sponsive to  your  question,  when  $100,000  contribution  was  made,  that 
I  had  a  considerable  argmnent  and  discussion  about  and  was  bitterly 
opposed  to,  I  had  the  privilege  of  having  that  information  in  1971. 

In  an  effort  to  try,  after  the  Secretary  of  Agriculture — and  I  know 
this  much  about  the  legislative  process — he  made  an  announcement. 
I  realized  he  can  easily  change  that  announcement  if  new  information 
were  to  come  to  light,  whatever  new  information  might  come  to  light. 
But  he  had  made  a  determination  that  he  would  not  increase  it. 

He  had  macl;'  it  unusually  early,  because  he  had  until  April  1,  and 
he  made  it  along  about  Avhen — March  10,  11,  somewhere  in  that  vicin- 
ity. I  think  it  was  earlier  than  they  would  normally  make  it. 

This  price  support  at  the  time  that  he  did  make  it  was  below  75  per- 
cent and  was  not  in  keeping  with  what  the  law  actually  said,  because 
it  was  not  up  even  to  the  minimum  of  7a  ])ercent.  And  even  in  spite  of 
that,  he  said  he  would  not  inci-ease  it.  So  I  think  we  liad  as  good  a  case 
as  Ave  would  have  evei-  had,  be  it  Republicans  ov  be  it  Democrats,  to 
go  the  legislative  route  without  anything  being  e\il  or  bad  or  anything 
else. 


6135 

T  think  we  betrayed  some  of  the  Conofressmen  and  Senators  with 
whom  we  worked  and  asked  them  to  put  it  on.  This  is  a  feeling,  and  it 
is  not  anythinir  ille2;al  or  immoral  that  I  am  thinking  about.  I  mean, 
this  is  just  a  matter  of  the  way  I  feel. 

In  the  legislative  pro€ess,  if  you  go  to  work  on  the  Hill,  and  you  are 
going  to  pass  something,  it  may  be  vetoed,  but  you  have  got  friends 
from  now  on  on  the  Hill.  And  I  am  not  talking  about  any  contributions 
anybody  has  made,  because  you  tried  and  you  lost.  But  the  next  year — 
and  there  is  always  another  year- — that  you  have  got  these  same  prob- 
lems comin<r  np,  you  are  in  a  much  better  liglit  to  go  back  to  the  same 
people,  and  they  are  going  to  make  a  much  harder  effort,  and  in  1972 
we  would  have  easily  passed  the  price-support  increase,  and  it  could 
have  been  easily  overridden,  any  veto  that  the  President  might  have 
given  to  it. 

But  consequently,  we  were  in  no  position  in  1972  and  1973  to  go  back 
to  Congress,  because  we  pulled  off  in  1971. 

And  maybe  I  am  not  being  responsive  to  the  question,  but  I  am  try- 
ing to — this  is  the  pliilosophy.  This  was  the  tliought ;  tliis  is  my  own 
feelings  about  tlie  thing,  and  I  feel  rather  deeply  about  it. 

Mr.  Sanders.  Did  you  have  any  conversation  with  anj^  Congress- 
men concerning  the  $150,000  contribution  comparable  to  that  which 
you  had  with  Senator  Dole  ? 

Mr.  Lilly.  No. 

Mr.  Sanders.  Now,  you  have  mentioned  a  $100,000  contribution  in 
1968. 

Was  that  to  the  Republican  Party  ? 

Mr.  Lilly.  The  $100,000  in  1968  went  to  Herbert  Kalmbach. 

Mr.  Weitz.  In  1968  ? 

Mr.  Lilly.  1969.  I'm  sorry.  I'm  sorry ;  on  my  dates  it  should  have 
been  1969  and  was. 

Mr.  Nicholas.  So  that  the  record  will  be  clear,  he  is  talking  about 
August  1,  1969. 

Now.  on  that  point,  Mr.  Lilly,  did  you  have  any  discussion  with  your 
people — and  when  I  say  your  people.  I'm  talking  about  Harold  Nelson 
and  Jake  Jacobsen,  he  was  representing  AMPI  as  lead  counsel  at  the 
time — as  to  vour  feelings  about  this,  giving  this,  whatever  it  was, 
this  $100,000  gift,  donation 

Mr.  Lilly.  Contribution. 

Mr.  Nicholas  [continuing].  Contribution,  what  was  your  feeling 
;il)out  this,  to  Harold  Nelson  and  to  Jake  Jacobsen  ? 

Mr.  Lilly.  AV<>11,  I  won't  express  my  exact  language  here,  but  I  was 
bitterly,  bitterly  opposed  and  almost  was  relieved  of  my  job  at  this 
time  because  I  was  so  ])itterlv  op]>osed  to  doing  this  particular  thing 
and  not  going  through  political  committees  which  could  be  done. 

And  if  my  information  had  been  giAcn  to  me  in  1068,  the  reason 
it  couldn't  go  through  committees  was  because  Republicans 

Mr.  Nicholas.  1969. 

Mr.  Lilly.  In  1969.  Because  the  Republicans  couldn't  trust  commit- 
tees so  it  would  get  to  the  ultimate  source.  And  I  said  don't  contribute 
anything  to  them  if  this  is  really  the  way  that  they  operate,  and  I 
still  feel  the  same  way. 

And  I  made  this  i-ather  strong  pitch  to  Mr.  Nelson,  and  to  the 
extent  that  I  almost  severed  relationships  with  the  company  at  that 
time. 


6136 

Mr.  Ntcpiolas.  Well,  was  there  any  discussion  at  the  time  when 
this  $100,000,  Anjxiist  1.  1969— credit,  "debit — I  mean  that  yon  sijrned 
to  procure  this  $100,000  to  deliver  it  to  Semei^  who  alleg^edly  delivered 
it  to  Kalmbach  as  to  the  legality  or  illefrality  of  it  ? 

As  far  as  committee  for  TAPE  or  AMPT  was  concerned,  how  were 
they  poino;  to  explain  this? 

Afr.  Lir.LY.  Well,  of  course,  this  was  what  later  proved  to  l)f'  n 
problem,  because  the  statutes  at  that  particular  time  limited  the  amount 
of  contribution  you  could  make  to  any  one  individual  or  any  one  com- 
mittee in  any  one  year,  and  limited  it  to  $5,000.  And  this  would  have 
violated  that  particular  thing. 

Too.  at  the  end  of  the  year,  it  would  have  had  to  have  been  reported 
one  way  or  the  other  as  inadequate  as  the  reportinir  system  was  at 
the  time.  But  prior  to  the  report,  it  was  replaced  into  TAPE. 

Mr.  Weitz.  Counsel,  I  don't  want  to  interrupt  or  impede  your  ques- 
tioning. However.  I  think  the  record  on  Wednesday  did  elicit  and 
does  have  all  of  these  facts — now.  if  you  think  you  want  to  proceed, 
that  is  fine,  but  otherwise  it  mitrht  be  preferable  to  let  Mr.  Sanders 
at  l^ast  complete  questioning  with  regard  to  these  1972  transactions. 
And  if  there  is  something  else  you  want  to  elicit  or  question  the  witness 
about,  you  would  be  welcome  to  do  so  after  that. 

Tsthat  all  right, Mr.  Sanders? 

]Nrr.  Saxders.  Yes. 

Just  a  couple  more  questions. 

Do  von  have  any  knowledflre  that  the  funds  which  were  transmitted 
on  October  27.  1972.  to  the  Democratic  congressional  and  Senate  cam- 
paign committees  found  their  way  to  any  Democratic  Presidential 
candidates? 

Mr.  LiLiEY.  Tn  1972.  when  some  of  the  moneys,  some  portion  of  the 
moneys,  might  have  been  earmarked  for  a  particular  individual,  the 
moneys  would  not  have  been  earmarked  for  a  Presidential  candidate. 
Tf  T  am  correct  in  the  statement  that  none  of  the  Presidential  candi- 
dates foT-  the  Democratic  Party  were  up  for  reelection  at  the  same 
time  for  Senator.  T  am  assuminc:  that  they  were  not. 

Tsthat  right? 

Mr.  Saxders.  T  think  tliat's  correct. 

Mr.  Ltley.  ok. 

Tf  that  be  correct,  then,  the  moneys  were — what  moneys  were  out 
of  those  funds  earmarked,  would  have  been  earmarked  for  Senators 
that  weie  up  for  reelection  within  the  Democratic  Party  or  in  the 
House. 

Mr.  Sanders.  And  to  your  knowledge,  you  never  learned  of  any  of 
those  funds  being  subsequently  routed  to  any  Democratic-  Presidential 
candidates  ? 

Af  r.  LiLLT.  No. 

^Tr.  Sanders.  Do  you  have  a  recollection  that  Senator  Gavlord 
Xelson  was  the  chief  sponsor  and  spokesman  of  the  legislation  in  the 
Senate  concerning  milk  supports? 

Mr.  LiELv.  Are  you  referring  back  to  1971  ? 

Mr.  Sanders.  1971,  yes. 

Mr.  LiEEV.  AVell.  he  was  one  of  them,  certainly. 

Mr.  Sanders.  To  your  recollection,  were  any  of  these  funds  ear- 
marked for  him? 


6137 

Mr.  Lilly.  No,  I  don't.  I  would  say  this,  we  have  made  contribu- 
tions to  Senator  Nelson.  They  would  reflect  in  the  GAO  audit,  or  in 
the  records  prior  to  that  time. 

T  could  oret  the  records  and  educe  how  much  and  when  we  did  con- 
tribute to  Senator  Nelson. 

Mr.  Sanders.  Do  you  have  any  recollection  that  any  of  the  funds 
contributed  to  him  were  as  a  result  of  any  commitment  for  his  sup- 
port of  the  milk  legislation  ? 

Mr.  Lilly.  No. 

Mr.  Sanders.  OK. 

That's  all  I've  got. 

Mr.  Weitz.  I  just  have  a  coimnejit. 

We  discussed  this  matter  off  the  record  on  Wednesday,  and  T  think 
it  is  perhaps  useful  for  at  least  me  just  to — and  you  may  want  to, 
undoubtedly,  respond,  Mr.  Sanders,  to  note  for  the  record  that  while 
it  is  certainly  not  my  purpose  nor  my  intention  to  in  any  way  impede 
anv  of  your  questioning  or  the  scope  of  this  inquiry  today-^I  just,  as 
T  say,  for  the  record,  do  want  to  note  that,  while  contributions  to  non- 
Presidential  candidates  in  1971  and  1072  may  relate  in  some  way  to 
the  milk  price  support  decision,  which  is  one  of  the  subjects  for  in- 
quiry in  this  investigation,  the  predicate,  the  scope  of  the  committee's 
mandate  and  the  predicate  for  its  investigation  of  the  milk  decision, 
to  use  a  shorthand,  is  the  fact  the  independent  evidence  indicates,  or 
at  least  there  is  some  suggestion,  that  that  decision  was  procured  in 
exchange,  perhaps,  or  at  least  contemporaneous  with,  contemporaneous 
to,  commitments  and  subsequent  contributions  to  a  Presidential  can- 
didate in  1972  election. 

Now,  as  T  say,  it  is  moot  todav,  because  it  is  not  for  us  to  pass  on  it, 
but  at  least  I  just  want  to  note  for  the  record  that  it  is  not  clear  to  me 
that,  for  example,  the  earmarking  of  funds  in  October  of  19.72  to  cer- 
tain candidates,  certain  congressional  candidates,  who  were  not  then 
Presidential  candidates,  is  within  the  scope  of  the  committee's  work, 
even  if  they  were  in  some  way  related — and  as  yet  we  have  no  indi- 
cation of  that — some  way  related  to  their  support  for  milk  price  sup- 
port legislation  in  March  of  1971. 

Now,  you  are  welcome  to  respond,  as  I  know  you  will,  but  it  is  not 
by  way  of  objection  to  close  you  off.  I  just  want  the  objection  noted 
for  the  record. 

^fr.  Sanders.  T  appreciate  your  remark,  and  T  fully  understand 
vour  position.  And  T  want  the  record  to  show  that  our  position  is  that, 
if  there  is  evidence  that  there  were  factors  influencing  the  eventual 
administration  decision  to  increase  the  milk  price  support  other  than 
the  allegations  of  political  contributions,  by  way  of  justification  for — 
not  justification,  but  by  way  of  reason  for  those  supports,  then  these 
other  influencing  factors  become  extremely  relevant  to  the  investiga- 
tion, and  I  think  we  ai'e  entitled  to  elicit  facts  in  that  respect. 

In  other  woids,  if  the  administration  received  heavy  pressures  from 
Democratic  Congressmen  to  enact  statutory  supports  and  to  deprive 
the  administration  of  any  future  flexibility  in  those  supports,  then 
anv  political  contributions  which  were  made  or  promised  to  any  legis- 
lators for  their  support  of  such  legislation  becomes  extremely  rele- 
vant. And  that  is  the  basis  for  my  inquiries  in  this  regard. 

Mr.  Weitz.  All  right. 


I 


6138 

I  have  one  other  question,  and  then  we  can  either  take  a  break  or 
you  can  move  to  some  other  matters. 

My  question  is  this,  and  this  takes  us  back  a  little  bit,  but  this  con- 
cerns Mr.  Connally. 

T  believe  on  Wednesday  you  were  questioned  concerning  the  extent 
of  your  acquaintance  and  contacts  with  him  over  the  period  of  time 
preceding  March  of  1971. 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  And  I  believe  also — well,  let  me  ask  you  this. 

Is  it  your  testimony  that  while  he  was  Governor  of  Texas  and  while 
you  were  engaged  as  a  lobbyist  in  Texas  for,  first,  the  State  Farm 
Bureau,  and  then  associated  with  AMPI,  that  for  those  several  years 
during  the  1960's,  up  to  as  recently  as  the  beginning  of  1969,  you  had 
frequent  contact  with  him — and  by  frequent,  perhaps  as  much  as 
three  or  four  times  a  week — in  small  meetings,  sometimes  alone  with 
him,  sometimes  with  one  or  two  assistants,  over  various  matters  that 
were  then  pending  before  the  State  government,  and  that  he,  perhaps, 
would  have  had  reason  to  discuss  these  matters  at  length  with  you  at 
those  various  meetings  ? 

Mr.  Lilly.  Well,  that,  basically,  is  what  I  did  state. 

Our  legislature  meets  only  every  2  years,  limited  to  a  120-day  term, 
unless  a  special  session  is  called,  which  can  be  called  for  30  days  at  a 
time.  This  would  limit  it.  And  he  served — his  tenure  of  Governor  was 
6  years,  or  three  legislative  periods.  So  it  would  put  me  in  contact — and 
when  I  say  I  was  in  contact,  it  would  be  during  this  120-day  period 
that  our  legislature  was  meeting  during  these  particular  years  that  he 
was  Governor  insofar  as  legislative  matters  were  concerned. 

So,  when  you  say  daily — I  mean,  that  is  not  a  true  term  in  that  sense, 
or  frequently  during  the  legislative  sessions,  it  is  certainly  true,  yes. 

iSfr.  Weitz.  And  these  contacts,  as  I  recall  your  testimony,  were  not 
in  a  large  crowd,  but  rather  in  a  meeting  of  j^eihaps  no  more  than 
several  individuals,  including  yourself  and  former  Governor  Con- 
nally ? 

]\Ir.  Lilly.  Yes.  There  would  be  maybe  2  or  3  other  legislators  or  2 
or  3  other  lobbyists,  maybe  8  or  10  people,  but  not  large  assembly-type 
meetings. 

Mr.  Weitz.  And  you  would  speak  on  many  of  these  occasions 
directly  with  him,  and  he  would  speak  directly  to  you? 

Mr.  Lilly.  Yes.  I  have  spoken  to  him  on  many  occasions  about  prob- 
lems that  we  had.  a  certain  piece  of  legislation  we  were  trying  to  pass, 
trying  to  gain  his  support  as  to  whether  he  would  sign  the  legislation 
or  whether  he  would  veto  it,  or  if  there  was  something  in  the  legisla- 
tion that  he  did  not,  he  indicated  he  didn't  like,  to  try  to  amend  it  or 
change  it  in  the  committee  system  so  it  would  meet  his  approval. 

We  discussed  appropriations  for  some  of  the  agricultural  agencies 
that  we  Avere  vitally  interested  and- increased  appropriations  ns  well. 

Mr.  Weitz.  Did  he  ever  curse  in  your  presence? 

Was  he  prone  to  curse  from  time  to  time  ? 

Mr.  Lilly.  Not  in  mv  presence. 

IVfr.  Weitz.  Did  he  ever  get  excited  in  your  presence  ? 
Mr.  Lilly.  No.  No  more  than — by  nature,  I  mean,  he  appears  to  be 
excited  to  me  at  times,  but  I  mean,  he  is — this  is  his  normal  natui'f 
to  me. 


6139 

Mr.  Weitz.  Would  you  say  that  the  meetin£:s  that  you  had  with  him, 
or  at  least  many  of  the  meetings  which  you  had  with  him,  were  very 
formal  affairs  with  people  that  he  was  unfamiliar  with  or  fairly  in- 
formal meetings  in  which  there  was  a  lot  of  give  and  take  between 
those  present? 

Mr.  Lilly.  Well,  some  of  the  meetings  would  be  with  farmers  that 
I  happened  to  be  representing,  and  he  did  not  know  them.  I  mean,  in 
the  same  light  that  he  might  know  a  legislator  and  probably  the  con- 
versation would  be  a  little  more  formal,  but  not  a  great  deal  more,  be- 
cause he  isn't  that  type  person.  I  mean,  he  is  a  rather  informal  person 
to  talk  with,  and  rather  easy  to  talk  with. 

I  don't  know  if  I'm  being  responsive  to  your  question. 

Mr.  Weitz.  You  are. 

But  when  these  other  individuals  that  he  was  not  familiar  with  were 
not  present,  it  was  you  and  some  other  lobbyists  or  assistants  who  he 
was  familiar  with,  the  conversation  was  fairly  freewheeling  and  in- 
formaUas  you  put  it? 

Mr.  Lilly.  Rather  outspoken  in  what — he  would  do  this  or  he 
wouldn't  do  that,  and  you  had  no  misunderstanding  about  what  he 
intended  to  do,  and  he  usually  would  do  it. 

Mr.  Weitz.  Is  it  your  recollection  that  the  Governor  has  a  good 
memory  for  names  of  people  that  he  met  ? 

Mr.  Lilly.  I  don't  know  whether  he  does  or  not,  on  memories  of 
names. 

Mr.  Weitz.  Is  there  anything  outstanding  or  particularly  unusual 
about  his  memory  for  names  that  you  can  recall  ? 

Mr.  Lilly.  Not  to  me. 

Mr.  Weitz.  Did  he  ever,  during  this  period  of  time,  have  to  be  re- 
introduced to  you  or  reminded  of  your  name  by  anyone  present? 

Mr.  Lilly.  Not  that  I  recall. 

Mr.  Weitz.  So,  to  the  best  of  your  recollection,  whenever  you  met 
the  Governor  after  the  first  or  second  meeting  with  him 

Mr.  Lilly.  Well,  several  meetings. 

Mr.  Weitz.  Well,  after  several  meetings,  perhaps,  he  knew  you  on 
sight  and  would  address  you  as  Mr.  Lilly  ? 

Mr.  Lilly.  Yes.  And  on  occasions,  he  has  addressed  me  as  Bob,  I 
mean  by  first  names. - 

Mr.  Weitz.  Does  he  usually  address  people  by  their  first  names? 

Mr.  Lilly.  Normally. 

Mr.  Weitz.  People  that  he— would  he,  for  example,  when  you 
brought  these  farmers  along  with  you  who  you  represented,  whom 
perhaps  the  Governor  at  that  time  had  not  met  previously,  would  he 
address  them  by  their  first  names  ? 

Mr.  Lilly.  I  don't  know. 

Mr.  Weitz.  I  have  no  further  questions  at  this  time. 

If  you  would  like  to  take  a  break,  or  if  you  would  like  to  move  to 
some  other  areas  that  we  haven't  covered »- 

[Discussion  off  the  record.] 

Mr.  SA>n>ERS.  Since  we  have  talked  with  you  2  days  ago,  have  you 
had  any  different  or  clearer  recollection  concerning  a  meeting  you  told 
us  about  with  Governor  Connally  at  Page  Airways  at  National  Airport 
in  Washington  on  March  19  ? 

Mr.  Lilly.  If  March  19 — is  that  on  Friday  or  on  Saturday  ? 


6140 

Mr.  Sanders.  March  19  was  a  Friday.  And  as  you  recall,  we  searched 
the  airline  logs  for  that  day,  and 

Mr.  Lilly.  OK.  I  have  no — I  have  gone  back  over  it ;  I  have  had  an 
opportunity  to  have  reviewed  it  again,  and  I  have  no  changes  to  make 
in  what  I  have  testified  to  or  what  T  stated  earlier  this  week. 

Mr.  Saxders.  Now,  the  record,  of  course,  will  reflect  exactly  what 
you  told  us,  but  it  was  something  to  the  effect  that  while  you  were  in  a 
group  there.  Governor  Connally  came  into  the  vicinity.  He  saw  you 
and  spoke  to  you,  somewhat  aside  from  the  others. 

Mr.  LiLi,Y.  He  nodded  hello  to  the  group  and  then  called  me  aside. 

Mr.  Sanders.  And  then  he  said  to  you  words  to  the  effect  that  he 
thought  things  looked  good  and  it  was  in  the  bag,  apparently  referring 
to  a  new,  favorable  decision  on  milk  supports  ? 

INIr.  Lilly.  Yes. 

Mr.  Sanders.  Now,  what  I  wanted  to  do  is  just  question  you  a  little 
further  about  his  conversation  with  you  on  that  occasion. 

Mr.  Lilly.  All  right. 

Ml-.  Sanders.  Do  you  i-eeall  that  he  actually  keyed  his  conversa- 
tion to  a  milk  price  decision  when  saying  it  looks  good,  or  it's  in  the 
bag? 

INIr.  LirxY.  Well,  to  me,  having  had  a  meeting  a  day  or  two  before 
with  some  people  that  had  had  a  conversation  with  him,  and  know- 
ing that  he  was  aware  of  it,  en  route  to  the  airport,  T  know  that  Dave 
Parr  was  in  the  taxi  that  I  was  in,  Mr.  Nelson,  and  I  believe  we  were 
in  two  taxis,  and  we  saw  the  Governor — or  Secretary  Connally — 
passed  him  several  times.  He  passed  us  in  the  traffic  in  getting  to  the 
airport,  and  this  was  mentioned  at  the  time,  the  fact  that,  there  he 
goes.  And  I  believe  that  we  waved  at  him  at  one  time:  the  traffic  was 
slowed.  And  then  when  we  got  to  the  air]>ort,  I  moan,  we  did  beat  him 
to  the  airport,  and  he  did  walk  in.  and  this  was  a  very  brief  meeting. 
Apparently  his  plane  was  ready  to  leave. 

He  was  alone.  He  walked  into  the  airport.  We  were  all  in  a  group,  and 
he  called  mc  aside  and  briefly  discussed  this,  and  there  is  no  doubt  in 
my  mind  that  he  was  referring  to  the  price  support  problem  that  we 
had  pending  at  that  time. 

Mr.  Sanders.  It  may  be  that  what  he  said  to  you  on  that  occasion 
will  become  a  very  crucial  point,  and  T  would  like  to  establish,  to  the 
best  of  your  recollection,  what  he  actually  said,  as  opposed  to  what  you 
inferred  from  your  activity  of  the  past  week  or  two. 

Mr.  Lilly.  Well,  it  would  be  most  difficult  for  me  to  recall  the  exact 
words.  And  to  the  best  of  my  ability,  I  have  tried  to  sum  up  what  I 
thought  that  he  said,  or  words  to  the  effect  of  what  he  said.  I  moan,  I 
hope  T  have  related  that  conversation  as  near  as  I  could. 

And,  of  course,  this  was  in  March  of  1971.  It  was  some  time  ago. 
But  even  if  I  were  to  pursue  it  further,  I  would  still  come  up  with 
basically  the  same  thing.  I  have  nothing  to  change  in  what  I  have  said 
in  relation  to  that  conversation. 

Mr.  Sanders.  Could  he  not  as  well — strike  that. 
Could  Governor  Connally  have  meant  that  the  possibility  of  legis- 
lation looks  good? 

Mr,  Lilly.  Well,  probably — I  would  assume  anything  would  be 
possible.  But,  again,  I  would  go  back  and  state  that  he  was  not  talking 
about  legislation.  I  think  he  would  have  been — if  he  is  as  astute  as  I  am 


6141 

convinced  he  is,  he  would  have  been  well  aware  of  our  legislative 
status  as  to  how  many  sponsors  or  cosponsors  we  might  have  had  on 
the  legislation.  And  I  think  that  that  effort,  was  being  handled  totally 
separate  and  apart.  We  had  no  reason  to  have  gone  to  him— ^anyone 
did — to  have  talked  with  him  about  how  we  should  proceed  legislative- 
wise. 

I  think  we  had  the  expertise  in  that  field.  It's  a  matter  of  knocking 
on  doors  and  convincing  people  that  you  have  got  a  problem  and  you 
need  their  help. 

And  any  way  that  I  might  or  could  rationalize  or  rehash  or  rethink 
about  it  again,  he  could  only  refer  to  the  help  that  could  come  from  an 
administrative  standpoint,  and  not  from  a  legislative  standpoint. 

Mr.  Sanders.  Could  his  remarks  to  you  have  been  as  consistent  with 
general  inf  or-mation  he  had  learned  concerning  the  trend  of  the  White 
House  to  make  some  favorable  decision  for  milk  producers,  as  well 
as  it  was  consistent  with  any  inside  information  he  may  have  had  con- 
cerning a  specific  decision  soon  to  be  made  by  the  White  House  ? 

Mr.  L11J.Y.  I  don't  think  it  could  have  been  a  trend.  Until  the  time 
he  came  along,  we  were  convinced  that  insofar  as  the  White  House  or 
the  administration  decision,  that  they  were  not  going  to  grant  an  in- 
crease at  that  time.  So  we  had  nothing  going  in  our  favor,  insofar  as  a 
favorable  trend  from  the  White  House  was  concerned. 

And  I  had  put  in  a  rather  long  day  on  Friday  getting  legislators  to 
introduce  bills  to  do  that.  I  was  certainly  planning  to  be  back  in  Wash- 
ington on  Monday,  hitting  the  same  trail  again,  doing  the  same  thing, 
along  with  many,  many  other  cooperatives  across  the  country.  And  we 
had  no  favorable  information.  So  any  favorable  trend  that  might  have 
been  coming  out  of  the  White  House  I  would  have  been  totally  unaware 
of.  Mr.  Nelson  would — we  were  rather  discouraged. 

Mr.  Sanders.  Well,  inasmuch  as  he  was  a  Cabinet  officer,  that  type 
of  information  might  have  been  available  to  him. 

Mr.  Lilly.  It's  possible,  but  I  think  that  that  type  of  information 
would  have  come  more  from  the  Secretary  of  Agriculture  rather  than 
from  the  Secretary  of  the  Treasury  in  such  discussion.  At  least,  it 
would  have  appeared  to  me  to  have  gone  that  route,  not  through  the 
Secretary  of  Treasury.  It  is  a  little  out  of  the  field. 

Mr.  Sanders.  Now,  the  de^'ision  of  the  White  House  was  not  an- 
nounced until  March  25,  which  was  6  days  after  you  saw  Secretary 
Connally  at  the  airport  on  the  19th. 
Mr.  Lilly.  Right. 

Mr.  Sanders.  And  was  it  on  March  23  that  the  President  met  with 
milk  producers? 
Mr.  Lilly.  Yes. 

Mr.  Sanders.  Do  vou  know  of  any  indications  from  events  which 
transpired  between  March  19  and  March  25  that  a  decision  had  already 
been  made  by  March  19,  other  than  what  was  said  to  you  by  Governor 
Connally? 

Mr.  Lilly.  Not  that  I  can  recall.  I  do  know  that  the  next  week  I  was 
not  back  in  Washington  contacting  legislators.  The  other  groups  for 
the  most  part  had  left  Washington  and  departed. 

The  effort  to  contact  legislators — I  would  have  to  go  back  and  look, 
but  few  bills  if  any.  T  am  sure,  were  introduced  after  the  19th.  Ap- 
parently the  effort  did  slow  and  stop  along  that  time.  And  Monday, 


30-337   O  -  74  -  19 


6142 

when  Cori<rress  had  gone  back  in  session,  there  was  little  effort  being 
made,  some  little  effort,  was  still  being  made,  in  regards  to  it,  but  very, 
very  little  effort  on  the  part  of  AMPI ;  we  had  practically  no  one. 

Mr.  Sanders.  Did  you  not  return  to  Washington  on  the  following 
Monday,  solely  on  the  strength  of  what  Governor  Connally  said  to 
you? 

Mr.  Lti.ly.  If  I  could  look  at  my  calendar.  Do  you  have  it? 

Mr.  Weitz.  I  would  have  to  get  it  from  downstairs.  I  will  get  it, 
if  you  want  it. 

Mr.  Sanders.  You  mean  just  to  get  a  date,  or  do  you  need  notes? 

Mr.  Lilly.  Well,  I  would  like  to  see  notes  when  I  did  return  to 
Washington.  I'm  not  sure  I  was  in  Washington  on  Monday  following 
that  conversation.  I  was  in  Washington  the  next  week. 

Mr,  Sanders.  Well,  let  me  couch  it  differently. 

Are  you  saying  that  you  suspended  or  drastically  curtailed  your 
legislative  efforts  solely  on  the  basis  of  what  was  said  to  you  by 
Governor  Connally  ? 

Mr.  Lilly.  Yes. 

Mr.  Sanders.  Did  you  do  so  in  consultation  with  Nelson? 

Mr.  Ltlly.  This  conversation  that  I  had  with  Connally  was  related 
to  Nelson,  to  Dave  Pan-,  to  others  who  were  on  the  flight,  all  AMPI 
employees,  on  Friday  night  following  our  return  to  Little  Rock,  to 
San  Antonio,  and  we  were  most  elated  about  what  the  Secretary 
had  said. 

I  am  not  sure  of  their  actions  the  next  week,  but  it  was  generally 
agreed  that  we  did  not  have  to  push  any  harder  on  this  particular 
problem,  and  we  more  or  less  curtailed  our  activities.  I  don't  know 
that  anvone  gave  an  order  on  this,  but  we  felt  that  we  had  won  the 
battle,  I  mean  that  it  was  over,  that  we  weren't  going  to  push  on  it 
any  more. 

Mr.  Sanders.  Any  curtailment  of  your  legislative  effort  in  the 
following  week  would  have  been  a  key  item  of  strategy;  would  it  not 
have  been  something — would  it  not  have  meant  a  decision  which  you 
would  have  made  in  consultation  with  Nelson? 

Mr.  I/iLLY.  He  was  aware  of  what  Connally  had  told  me.  I  made 
him  aware  of  it,  and  I  truthfully  can't  recall  if  he  said,  "We  are  not 
going  to  work  any  more,"  or  "That's  it,"  or  what  might  have  happened. 

I  would  say  that  in  a  determination  of  deciding  that  we  still  needed 
to  contact  legislators  on  the  Hill  to  get  them  to  introduce  legislation 
as  to  who  we  needed,  how  many,  I  probably  would  have  made  that 
decision  more  than  INIr.  Nelson  would  have — ^with  his  approval,  but 
I  would  have  told  him  we  needed  5  people,  we  needed  10  people  up 
there  to  make  contacts;  we  needed  people  from  certain  States  because 
we  didn't  have  legislators  from  certain  States  supporting  us  that 
should  be  supporting  us. 

Dave  Parr  would  have  some  input  into  the  particular  same  sug- 
gestion. So  Mr.  Nelson  would  be  aware  of  it,  but  he  would  not  want 
to  issue  an  order  on  this  particular  thing  in  the  sense  that  you  pointed 
out.  Had  he  said.  "Go  back  to  AVashington  and  start,  getting  people 
to  introduce  legislation."  I  would  have  been  back  in  Washington  and 
have  people  introduce  legislation,  but^ — so  I  don't  know  that  any  order 
went  out  or  anything  to  that  effect,  that  we're  all  through,  we're  OK. 

Mr.  Sanders.  Now,  in  the  (^  days  after  your  cx)nversation  with  Gov- 


6143 

ernor  Connally  at  the  airport,  did  it  ever  appear  to  you  that  Nelson 
had  received  any  independent  intellig^ence  information  that  a  more 
favorable  decision  in  the  administration  was  imminent? 

Mr.  Lilly.  1  am  not  sure  of  Mr.  Nelson's  itinerary,  where  he  might 
have  gone  the  following  week.  Had  T  in  front  of  me  his  itinerary 
and  who  he  contacted,  this  would  indicate  to  me  a  great  deal  as  to  who 
he  would  have  been  working  with. 

For  one.  I  think  he  would  have  been  in  contact  and  working  with 
Mr.  Jake  Jacobsen.  T  think  he  would  have  been  in  contact  and  working 
Avith  Marion  Harrison,  who  was  a  portion  and  had  been  a  portion  of 
this  all  the  time.  I  think  Mr.  Parr  would  have  been  here.  I  think  some 
of  the  leaders  from  the  other  cooperatives,  particularly  Mid- America 
and  Dairymen's,  Inc.,  would  have  probably  been,  involved  in  conver- 
sations. 

If  I  had  the  advantage  of  having  his  diary  in  front  of  me  or  know- 
ing his  itinerary  or  where  he  ^went  or  who  he  contacted,  T  could  be 
really  more  responsive. 

Mr.  Sanders.  Did  you  convey  the  information  from  Connally  to 
anv  counterparts  of  yours  in  Dairymen's  Inc.  or  Mid- America? 

Mr.  Lilly.  I  did  not.  All  of  the  people  in  our  group  were  on  the 
plane,  and  this  was  my  conA^ersation.  If  it  had  been  conveyed — and 
I'm  sure  it  was  conveyed — I  think  that  Mr.  Nelson  or  Mr.  Parr  would 
have  conveyed  it  to  Mid-America  and  Dairymen's,  Inc. 

Mr.  Sanders.  Who  did  you  consider  to  be  your  counterpart  in  Dairy- 
men's Inc.  ? 

Mr.  Lilly.  You're  talking  about  my  particular  counterpart? 

Mr.  Sanders.  Yes,  sir. 

Mr.  Lilly.  At  the  time,  they  truthfully  didn't  have  someone  in  the 
true  capacity  that  I  was  supposed  to  haA'e  been  serving  in.  Currently, 
they  do  haA^e  a  gentleman  by  the  name  of  Joe  Westwater.  He  AAas  Avork- 
ing  for  them  at  that  time;  he  still  is  Avorking  for  them.  He  is  in  this 
capacity.  This  has  been  2  or  3  years  ago,  but  he  had  not  had  the 
experience  at  that  time.  So  I  think  he  would  be  the  counterpart,  as 
near  as  they  had  a  counterpart  at  that  time. 

Mr.  Sanders.  Who  did  you  consider  to  be  your  counterpart  in  Mid- 
America  ? 

Mr.  liiLLY.  Crary  Hanman ;  that's  H-a-n-m-a-n. 

Mr.  Sanders.  And  that  would  be  true  AA'ith  respect  to  March  1971  ? 

Mr.  Lilly.  Yes. 

Mr.  Sanders.  That's  all,  Alan. 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Nicholas.  Mr.  Weitz  has  been  asking  some  questiois,  prior 
to  this  time,  as  to  Mr.  Lilly's  personal  acquaintance  with  Mr.  Con- 
nallv. 

Mr.  Lilly,  in  that  connection,  I  want  to  ask  you  this.  For  how  many 
vears  haA^e  you  known  Mr.  Connallv  ? 

Mr.  Ln.LY.  I  haA^e  known  him  for  at  least  12  to  15  years.  I  knew 
him  prior  to  the  time  that  he  Avas  Governor  of  Texas,  and  he  was 
Governor  for  6  years.  And  then  we  haA^^had  a  Governor  4  or  5  years. 
vSome  12  to  15  years. 

Mr.  Nicholas.  All  right. 

Was  your  acquaintance  with  Mr.  Connally  of  a  professional  lobbyist 
basis,  or  Avas  it  a  personal  basis  ? 


6144 

Mr,  Lilly.  It  was  a  professional  lobbyist  basis  and  certainly  not  on 
a  pei-sonal  basis. 

Mr.  Nicholas.  And  in  most  instances  would  you  call  him  Mr.  Con- 
nally,  or  would  you  call  him  Governor,  or  would  you  call  him  John, 
or  what  would  you  call  him  ? 

Mr.  Lilly.  I  called  him  Governor  Connally. 

Mr.  Nicholas.  In  other  Avords,  you  would  always  address  him 
formally? 

Mr.  Lilly.  Formally. 

Mr.  Nicholas.  That's  all. 

Mr.  Weitz.  All  right. 

We'll  take  a  recess  now. 

[Whereupon,  at  1 :05  p.m.,  the  hearing  in  the  above  entitled  matter 
was  recessed  to  reconvene  at  2  p.m.] 

afternoon  session 

]Mr.  Sanders.  Mr.  Lilly,  I  want  to  ask  you  a  series  of  questions  con- 
cerning an  arrangement  or  agreement  between  AM'PI  and  Valentine, 
Sherman  and  Associates.  Now,  I  have  read  your  3  page  statement  cap- 
tioned "VI.  Valentine  and  Associates"  concerning  this  matter,  and  it 
will  not  be  necessary  for  you  to  cover  this  again. 

Mr.  Lilly.  All  right. 

Mr.  Sanders.  I  will  just  ask  you  some  questions  designed  to  amplify 
this.  You  begin  by  mentioning  "July  10  ( ? ) ,  1 971 ." 

Mr.  Lilly.  That  is  true. 

Mr.  Sanders.  Was  that  date — did  that  date  mark  your  first  knowl- 
edge concerning  any  arrangement  between  AMPI  and  Valentine? 

Mr.  Lilly.  Yes.  it  did.  That  was  my  first  knowledge  of  them. 

Mr.  Sanders.  Did  you  have  any  knowledge  that  AMPI  had  pre- 
viously any  agreement  with  Valentine  for  still  other  work? 

Mr.  Lilly.  No,  I  have  no — prior  to  this  July  1971  date,  no,  I  have  no 
knowledge. 

Mr.  Sanders.  A^^at  is  your  general  understanding  as  to  the  primary 
business  endeavor  of  Valentine? 

Mr.  Lilly.  Having  visited  Valentine,  Sherman  and  Associates  at 
their  office,  my  impression  would  be  that  you  miafht,  in  a  loose  sense, 
refer  to  it  as  a  public  relations  firm  oriented  in  the  field,  the  political 
field.  "V\nien  I  say  PR  firm,  one  that  would  send  out  solicitations,  mail- 
ings, send  out;letters,  bulk  mailinar-type  things,  one  that  micrht  ha^'e 
to  use  a  computer  to  compile  mailing  lists  to  feed  other  data  into  it, 
but  certainly  oriented  in  the  political  media  field. 

Mr.  Sanders.  Did  you  come  to  understand  that  Valentine  had  an 
internal  capability  to  perform  these  services,  the  type  of  service  you 
have  just  described  ? 

Or  did  they  in  turn  contract  it  out  to  other  firms  or  persons? 

Mr.  Lilly.  Truthfully.  T  do  not  know.  I  visited  Mr.  Valentine  at  his 
office.  It  was  located — T  do  not  have  the  address  here — but  it  was  lo- 
cated in  a  building  in  whicli  a  computer  and  all  the  equi})ment  that 
goes  witli  the  computei-  was  located.  It  could  have  been  other  equip- 
ment thnl  he  could  have  had  time  leased  on  it.  It  could  have  been  equip- 
ment that  he  had  himself  with  his  partner  leased. 

But  it  was  quite  apparent  that  he  had  access  to  this  particular  com- 
puter equipment. 


6145 

Mr.  Sanders.  Do  you  know  whether  Valentine — and  when  I  use  that 
term  I  mean  the  firm 

Mr.  Lilly.  Right. 

Mr.  Sanders.  Whether  Valentine  had  just  recently  come  into  being? 

Mr.  Lilly.  I  have  no  idea  of  how  long  he  had  been  in  existence,  or 
operating  in  this  particular  wor.k,  because  this  was  my  first  encounter 
with  him. 

Mr.  Sanders.  Is  it  your  understanding  that  they  are  now  defunct  ? 

Mr.  Lilly.  This  I  have  heard.  I  don't  know  it  to  be  true.  But  I  do 
understand  that  they  are  defunct. 

Mr.  Sanders.  Was  it  your  understanding  that  the  firm  was  incor- 
porated ? 

Mr.  Lilly.  It  would  indicate  it  by  the  way  and  the  manner  in  which 
the  checks  were  made  out  to  Valentine,  Sherman  and  Associates. 
Maybe  not  incorporated.  Certainly,  a  company.  T^t  me  ])ut  it  in  that 
way.  I  really  don't  know  whether  they  were  incorporated  or  not. 

Mr.  Sanders.  Did  it  appear  to  you  that  Mr.  Valentine  was  the  ownier 
or  principal  owner  of  the  firm  ? 

Mr.  Lilly.  Yes. 

Mr.  Sanders.  "V^Hiat  is  his  full  name  ? 

Mr.  Lilly".  I  don't  know.  I  have  some  letters  signed  by  him. 

Jack;  Jack  Valentine  is  at  least  the  way  he  signs  his  letters. 

Mr.  Sanders.  iVnd  you  have  had  personal  conversations  with  Mr. 
Valentine? 

Mr.  Lilly.  Yes ;  on  two  or  three  occasions. 

Mr.  Sanders.  Have  you  had  direct  contact — or,  well,  is  there  a  Mr. 
Slierman  ? 

Mr.  Lilly.  If  there  is,  I  didn't  meet  Mr.  Sherman. 

Mr.  Sanders.  Did  Mr.  Valentine  emr  mention  a  Mr.  Sherman  to 
you? 

Mr.  Lilly-.  Possibly.  I  don't  recall  it.  I  only  dealt  with  Mr.  Valen- 
tine. And  I  know  some  checks,  some  correspondence  referred  to  Valen- 
tine, Sherman  and  Associates. 

Mr.  Sanders.  Your  statement  indicates  that  a  file  was  subsequently 
prepared  after  the  fact  concerning  the  business  transactions  between 
AMPI  and  Valentine. 

Mr.  Lilly.  That  is  true. 

Mr.  Sanders.  Is  it  vour  undei-standing  that  no  contract  existed  be- 
fore Valentine  undertook  to  do  this  work? 

Mr.  Lilly.  If  a  contract  existed  I  am  not  aware  of  it.  It  would 
probably  have  been  a  verbal  contract  between  Valentine  and  someone 
else.  Certainl}'  not  me. 

Eventually,  a  contract  did  come  into  being  at  a  time  when  Mr.  Valen- 
tine— that  I  referred  to  in  my  notes — but  to  my  knowledge,  that  is 
the  onl  V  contract  that  we  had. 

Mr.  Sanders.  Did  it  appear  to  vou  that  Valentine  and  Associates 
did  in  fact  perform  some  work,  did  render  some  goods  or  services  pur- 
suant to  some  agreement  with  AMPI. 

Now.  aside  from  who  might  have  had  the  benefit  of  them,  that  they 
(lid  in  fact  produce  some  goods  or  services? 

Mr.  Lilly.  The  only  knowledare  of  what  services  were  performed  by 
Valentine  and  Associates,  at  a  time — and  I  have  it — they  did  send  me 
six  tapes,  IBM  tapes,  apparently  with  names  of  farmers,  including 


6146 

names,  addresses,  located  in  several  States.  And  at  a  later  date,  one 
single  roll  of  IBM  tape  reel  was  sent,  making  a  total  of  seven  tapes 
that  were  received  long  after  the  first  conference  with  Mr.  Valentine  in 
regard  to  this. 

Mr.  Sanders.  Aside  from  your  receipt  of  these  reels,  what  other  in- 
formation do  you  have  which  would  indicate  that  Valentine  did  in 
fact  perform  some  services  pursuant  to  the  arrangement  with  AMPI  ? 

Mr.  Lilly.  Actually,  I  have  nothing  else  to  do— outside  of  a  series  of 
correspondence  that,  I'm  not  sure  if  it's  been  made  available  or  not. 
But  there  is  available  the  correspondence  which  outlines  the  proce- 
dure, the  contract,  the  various  things.  And  outside  of  that  I  have  noth- 
ing else  from  Valentine  and  Associates. 

Mr.  Sanders.  The  correspondence  to  which  you  are  now  referring, 
would  that  have  been  prepared  genuinely  as  it  occurred,  or  was  that 
prepared  after  the  fact  ? 

Mr.  Lilly.  This  was  prepared  after  the  fact.  It  was  prepared  after 
December  1971,  and  before  March  23, 1972,  as  a  matter  of  fact  in  March 
of  1972 — ^March  23,  I  did  visit  with  Mr.  Valentine  in  the  airport  in 
Minneapolis,  and  he  signed  and  executed  all  of  the  correspondence  in 
the  Valentine,  Sherman  and  Associates  file.  It  is  in  the  AMPI  files  now. 
I  signed  copies  at  the  same  meeting  at  the  same  time,  and  the  entire 
file  was  drafted  at  that  particular  time  and  signed  and  executed,  in- 
cluding the  contract. 

Mr.  Sanders.  Alan,  do  we  have  copies  of  all  of  this  now? 

Mr.  Weitz.  "Well,  I  believe  so.  This  is  what  I  think  the  witness  is 
referring  to,  and  you  ought  to  make  sure  that  that  is  a  complete  file. 

Mr.  Sanders.  Did  they  just  now  give  you  this  ? 

Mr.  Weitz.  No  ;  we  have  had  this  before. 

If  you're  going  to  provide  something  else 

Mr.  Nicholas.  No  ;  I  just  want  to  see  if  it's  the  same  files. 

Mr.  Sanders.  Why  don't  I  just,  let  you  look  at  it? 

Mr.  Nicholas.  Yes. 

[Discussion  off  the  record.] 

Mr.  Nicholas.  You've  got  one  more  letter  than  we  do. 

Mr.  Weitz.  Was  that  supposed  to  be  in  there  ? 

Mr.  Nicholas.  Yes,  it's  supposed  to  be  in  here. 

Mr.  Lilly.  This  has  lieen  shuffled  through  a  lot  of  times.  But  we  have 
the  original  in  our  file. 

Mr.  Sanders.  Well,  Mr.  Lilly  just  handed  me  a  series  of  documents 
which  Mr.  Weitz  had  previously  received.  Mr.  Lilly  has  now  examined 
these  with  his  counsel. 

Can  you  state  now,  Mr.  Lilly,  whether  these  are  the  documents  which 
were  executed  by  you  in  the  airport  when  you  met  with  Mr.  Valentine? 

Mr.  Lilly.  Yes ;  they  had  been  prepared  by  Mr.  Valentine  prior  to 
March  23.  1972.  I  had  delivered  to  Mr.  Valentine  some  blank  AMPI 
letterhead  paper,  and  on  March  23, 1972,  when  I  met  in  the  airport  with 
Mr.  Valentine,  all  of  the  documents  that  you  have  there  were  executed 
at  that  time  by  me  and  by  Mr.  Valentine. 

Mr.  Weitz.  May  we  go  off  the  record  for  a  moment  ? 

[Discussion  off  the  record.] 

Mr.  Weitz.  Back  on  the  record. 

Mr.  Sanders.  None  of  these  documents,  then,  were  prepared  con- 
temporaneously with  the  date  which  they  bear? 


6147 

Mr.  Lilly,  '^o  ;  they  were  not. 

They  may  have  been  prepared,  but  they  were  not  executed — with 
the  exception  of  one  date,  I  am  not  sure  when  Mr.  Valentine  prepared 
the  documents. 

Mr.  Sanders.  You  have  a  duplicate  set  in  front  of  you  ? 

Mr.  Lilly.  Yes. 

Mr.  Sanders.  I  just  want  to  identify  them  very  quickly  and  briefly 
for  the  record,  so  we're  sure  we're  talking  about  the  same  spurious 
documents. 

Why  don't  I  mark  these  all  with  the  next  exhibit  number? 

Mr.  Weitz.  That  would  be  31. 

Mr.  Sanders.  Exhibit  No.  31  as  follows.  A  letter  of  agreement,  dated 
April  29, 1971. 

Mr.  Lilly.  Right. 

Mr.  Sanders.  A  letter  from  Valentine  to  Lilly,  dated  February  1. 
1971. 

Mr.  Lilly.  Right. 

Mr.  Sanders.  Let  me  just  continue  through  them,  and  interrupt  me 
only  if  one  is  not  correct. 

]\Jr.  Lilly.  OK,  sir,  all  right. 

Mr.  Sanders.  A  letter  from  Lillv  to  Valentine,  dated  February  23, 
1971;  from  Valentine  to  Lilly.  date<:l  March  1,  1971;  from  Lilly  to 
Valentine,  April  10, 1971 ;  Valentine  to  Lilly,  April  17, 1971 ;  Valentine 
to  Lilly,  April  28, 1972. 

Mr.  Lilly.  I  don't  have  that  one  in  my  file. 

Mr.  Nicholas.  That'sthe  one  we're  missing. 

Mr.  Sanders.  Can  you  state  that  that  was  one  that  was  executed  at 
the  airport? 

Mr.  Lilly.  Yes ;  I  can. 

Mr,  Sanders.  With  attachment  ? 

Mr.  Lilly.  The  attachment — can  we  go  off  the  record  ? 

Mr.  Weitz.  Off  the  record . 

[Discussion  off  the  record.] 

Mr.  Sanders.  All  right,  back  on  the  record. 

I  have  shown  you  the  Valentine  to  Lilly  letter  of  April  28, 1972.  All 
these  others  that  we  have  been  going  through  have  been  dated  1971. 

Should  that  be  1971? 

You  said  you  met  with  him  on  March  23.  1972,  most  likely  not 
preparing  a  document  to  come  into  being  thereafter. 

Mr.  Lilly.  The  one  of  April  28. 1972,  is  a  cover  letter  foi-  the  attacli- 
ment,  and  it  states  in  there  that  this  is  the  type  layout  for  your  com- 
puter programers.  And  this  is  the  key  to  the  programs  tliat  he  did 
send  to  me. 

Mr.  Sanders.  This  letter  of  April  28,  then,  is  most  likely  prepared 
genuinely  on  the  date  it  bears  ? " 
.    Mr.  Lilly.  True.  T  would  say  it  would  be  prepared  genuinely. 

Mr.  Sanders.  All  right,  we  will  lay  that  aside. 

Lilly  to  Valentine.  April  29, 1971 ;' Valentine  to  Lillv,  June  25, 1971 : 
Lilly  to  Valentine.  July  15,  1971 ;  Valentine  to  Lillyi  October  4,  1971 
Lilly  to  Valentine.  October  13.  1971;  Valentine  to  Lilly,  Deceml3er  1, 
1971 ;  Lilly  to  Valentine,  December  8,  1971;  a  sheet  bearing  only  the 
words  "that  must  still  be  resolved." 


6148 

Mr.  NiOHOiuVS.  What  was  the  last  letter  you  read  before  that  last 
statement? 

Mr.  Sanders.  Dated  December  8. 

Ml.  LiLJLY.  I  believe  it  has  no  significance.  I  am  not  sure  it  is  tied 
with  this  particular  correspondence.  I  have  seen  the  document  before, 
but  I  don't  tie  any  significance  to  it. 

Mr.  Sanoers.  All  right,  then  a  series  of  Valentine,  Sherman  invoices. 
I  will  read  only  their  dates. 

Mr.  Lilly.  All  right. 

Mr.  Sanders.  May  10, 1971 ;  May  31, 1971 ;  June  10, 1971 ;  August  9, 
1971;  September  1,  1971;  September  24,  1971;  November  12,  1971; 
December  1,  1971. 

Mr.  Lilly.  Right. 

Mr.  Sanders.  You  confirm  that  all  of  these  were  executed  by  you 
and  Valentine  in  the  airport  March  23,  1971.  Not  prepared  there,  but 
finalized  there? 

Mr.  Lilly.  Yes,  the  invoices  that  you  referred  to  probably  were 
sent  in  at  about  the  time  that  they  indicate  on  there — separate  and 
apart,  and  were  not  a  part  of  this  correspondence,  because  some 
checks  had  been  issued  and  they  had  been  paid.  So  I  feel  that  they 
had  been  sent  separate  and  apart. 

[Whereupon,  the  documents  referred  to  were  marked  Lilly  exhibit 
No.  31  for  identification.*] 

Mr.  Sanders.  To  your  knowledge,  has  anyone  within  AMPI  run 
or  made  use  of  the  IBM  reels  which  were  sent  to  you  by  Valentine? 

Mr.  Lilly.  To  my  knowledge,  no  one  has  made  use  of  them,  nor 
have  they  been  put  on  the  computer  to  see  if  any  information  is  con- 
tained on  them. 

Mr.  Weitz.  Counsel,  if  I  may  interrupt  for  a  moment. 

May  I  refresh  your  recollection  ? 

Might  it  have  been  possible  that  several  weeks  ago,  when  members 
of  the  staff  of  the  committee  were  at  AMPI,  that  those  reels  were  in 
fact  put  on  the  computer  ? 

Mr.  Lii,LY.  The  reels,  at  least  six  of  the  reels  that  were  in  my  office — 
1  don't  know  if  the  seventh  reel  that  was  in  the  safe  in  the  office — 
were  put  on  the  computer  or  not. 

Mr.  Alan  Weitz  and  Andy  Chinni  were  there,  and  with  some  of 
the  AMPI  personnel  who  work  in  data  processing,  they  did  take  th« 
tape  to  the  data  processing  machine,  and  I  assume  used  them.  But  I 
have  not  heard  the  results  of  that.  I  don't  know. 

Mr.  Weitz.  Let's  go  off  the  record. 

[Discussion  off  the  record.] 

Mr.  Sanders.  OK,  back  on  the  record. 

Until  the  time  when  this  committee's  staff  visited  your  offices 
recently,  did  you  have  knowledge  of  the  content  of  the  tape  ? 

Mr.  Lilly.  No,  other  tlian  by  correspondence  that  indicated  some 
information  that  names  and  addresses  would  be  contained  on  them. 
But  I  had  no  knowledge  that  the  information  was  actually  there. 

Mr.  Sanders.  As  a  result  of  the  visit  of  the  staff,  have  you  learned 
of  the  content  of  the  tape  ? 

Mr.  Lilly.  Yes.  Apparently  there  aie  names,  addresses,  and  ZIP 
codes  on  those  tapes,  and  by  States  in  which  they  are  indicated. 

•See  p.  6193. 


6149 

Mr.  Sanders.  Do  you  know  what  the  lists  represent  ? 

Mr.  Lilly.  No.  I  think  in  the  correspondence  it  refers  to  lists  of 
names. 

Mr.  Sanders.  Well  now,  what  you  are  about  to  tell  me  is  what  maybe 
was  intended.  But  what  I  am  asking  is  what  they  in  fact  do  represent. 

Mr.  Lilly.  I  do  not  know  what  they  represent. 

Mr.  Nicholas.  I  don't  think  he  understands  the  import  of  your  ques- 
tion. I  don't  think  he  understands  your  question,  really,  as  to  what 

Mr.  Lilly.  Would  you  enlarge  on  your  question  ? 

Mr.  Sanders.  Is  it  your  understanding  that  the  lists  are  the  names 
of  dairy  farmers? 

Mr.  Lilly.  No.  I  talked  with  Mr.  Nelson  at  one  time.  I  asked  him 
what  the  lists  were  supposed  to  be  for,  and  he  said  a  list  of  farmers  and 
not  necessarily 

Mr.  Sanders.  Not  limited  to  dairy  farmers? 

Mr.  Lilly.  Not  limited  to  dairy  farmers,  in  a  series  of  States — was 
being  put  together.  And  this  was  for  the  purpose  of — we  were  going  to 
have  a  mail  solicitation  on  soliciting  these  farmers  in  an  insurance 
program. 

Mr.  Sanders.  Mr.  Nelson  told  you  this  ? 

Mr.  Lilly.  That's  right. 

Mr.  Sanders.  At  what  point  in  time  ? 

Mr.  Lilly.  That  was  sometime  during  1971  when  I  became  involved 
with  Mr.  Valentine  and  met  him,  and  was  talking  to  him  at  that  time. 

Mr.  Sanders.  Would  that  be  after  July  19, 1971  ? 

Mr.  Lilly.  It  would  be  after  July  19,  1971,  and  it  would  be  prior 
to  mid-January  of  1972.  So  somewhere  in  the  time  of  July  to  January 
he  would  have  told  me  that. 

Mr.  Sanders.  Do  you  know  whether  the  contact  with  farmers  for 
insurance  purposes  on  behalf  of  AMPI  did  occur? 

Mr.  Lilly.  It  did  not  occur.  We  did  not — we  had  insurance,  but  we 
went  to  insurance  companies.  We  did  not  have  our  own  insurance 
company.  And  the  contacts  did  not  occur.  The  names  on  the  tapes  that 
were  to  be  contacted,  if  they  were  to  be  for  insurance  contacts,  were 
never  utilized. 

Mr.  Sanders.  Can  you  state  any  reason  whatsoever — let  me  rephrase 
that. 

To  your  knowledge,  did  AMPI  for  any  reason  whatsoever  at  any 
time  send  out  a  bulk  mailing  to  categories  of  persons  other  than  dairy 
farmers  ? 

Mr,  Lilly.  Not  to  my  knowledge.  And  I  believe  that  I  would  have 
had  some  knowledge  of  it  had  bulk  mailings  gone  out,  because  it  would 
no  doubt  have  originated  in  the  home  office  in  San  Antonio,  and  we 
had  no  solicitation  of  members  outside  of  our  own.  I  mean  of  potential 
members  or  of  potential  insurance  customers  outside  of  our  own  mem- 
bers did  we  have  any  bulk  mailing. 

Mr.  Sanders.  Any  solicitation  of  farmers  for  insurance  purposes, 
would  any  solicitation  of  farmers  for  insurance  purposes  have  had  to 
be  limited  to  dairy  farmers  ? 

Mr.  Lilly.  No.  Well,  in  our  instance  I  would  say  that  it  would  have 
had  to,  because  we  were  organized  as  a  dairy  cooperative.  And  we 
would  have  to  be  limited,  not  only  to  dairy  farmers,  but  to  dairy  farmer 
members  that  belonged,  that  were  members  of  AMPI. 


6150 

Mr.  Sanders.  Who  within  AMPI  had  overall  responsibility  for  your 
computer  services  ? 

Mr.  Lilly.  Mr.  Bob  Isham  had  overall  responsibility  for  the  com- 
puters, not  the  day-to-day  operation,  the  technical  part  of  the  com- 
puter, but  the  supervisory  people  who  were  responsible  for  the  com- 
puters was  the  responsibility  of  Mr.  Isham's. 

Mr.  Sanders.  When  vou  received  these  reels  from  Valentine,  why 
didn't  vou  give  them  to  Tsham  ? 

Mr.  Lilly.  T  had  had  a  conversation  with  Mr.  Isham  in  Julv  of  1971, 
at  a  time  when  Mr.  Nelpon  had  requested  a  $25,000  check,  AMPI  check 
for  Valentine.  Sherman  &  Associates.  And  Mr.  Isham  at  that  time, 
after  issuing  the  check,  asked  me  what  knowledge  I  had  of  Valentine, 
Sherman  &  Associates,  who  they  might  be,  why  a  check  for  $25,000 
would  have  been  made  out  and  delivered  to  them  apparently  by  Mr. 
Nelson. 

And  I  told  him  I  didn't  know.  And  he  was  aware  of  the  billings  that 
did  come  in  from  Valentine  &  Associates.  I  know  that  he  contacted 
Mr.  Nelson  to  set  approval  for  payment  of  those  invoices  that  would 
come  in  from  Valentine,  Sherman  &  Associates.  And  I  personally  had 
no  rea'^on  to — maybe  I  made  Mr.  Isham  aware  that  the  computer  tapes 
were  there  in  my  office,  and  maybe  I  didn't.  I  truthfully  don't  re- 
member. 

One  of  them  was  actually  sent  to  the  computer  room,  received.  I  was 
called  bv  Mr.  Bob  Semer  who  works — ^he's  a  programer — 'and  he 
asked  me  what  I  wanted  to  do  with  the  tape.  And  I  told  him  he  could 
put  it  in  the  file. 

Now,  this  was  a  later,  after  the  six  had  come  in,  this  was  a  later 
receipt — until  we  received  the  seventh  one  that  came  in. 

Mr.  Sanders.  It  would  appear,  then,  that  you  felt  that  these  seven  or 
it  may  be  six  reels  of  tape  had  no  genuine  value  to  AMPI  then? 

Mr.  LiLT,Y.  No,  and  it  was  based  on  some  other  conversations  that  I 
had  had  with  Mr.  Nelson  and  Mr.  Parr  at  various  times. 

Mr.  Sanders.  Now,  you  in  your  immediate  response  to  my  question 
said.  "No."  Let  me  get  a  clear  understanding  here. 

I  will  state  the  question  again. 

Mr.  Lilly.  All  right, 

Mr.  Sanders.  It  appears  to  me  now.  from  all  you  have  said,  that  you 
felt  upon  receipt  of  these  reels  that  they  had  no  genuine  value  to 
AMPI.  Is  that  true? 

Mr.  liiLLY.  That  is  true,  and  I  would  like  to  enlarge  on  that  answer. 

Mr.  Sanders.  All  right. 

Mr.  Lilly.  I  had  had  conversations  durinar  this  time  of  July  1971 
until  Janiiarv  of  1972  at  various  times  with  Mr.  Nelson  and  Mr.  Dave 
Parr,  and  I  had  been  given  information  as  to  what  the  total  amounts  of 
monev  that  would  .o-o  to  Valentine.  Sherman  &  Associates  in  the  amount 
of  $137,000  would  be  for.  Conflicting  stories,  but  my  notes — ^and  I  did 
make  notes  at  or  about  the  time  I  was  given  this  information. 

In  one  of  them  I  was  informed  that  Congressman  Culver  of  Iowa 
would  receive  $50,000  of  this  monev :  and  that  No.  2.  Governor  Hall  of 
Oklahoma  would  be  fho  recipient  of  $80,000  of  this  monev;  No.  3, 
Governor  Dockine:  of  Kansas  would  receive  $25,000  of  this  monev; 
No.  4,  Congressman  James  Abourezk,  who  was  elected  Senator  in 


6151 

South   Dakota,  $7,000;   H.   H.   H.,   indicating  Hubert   Humphrey, 
$25,000,  totaling  $137,000. 

Mr.  Sanders.  Who  told  you  this? 

Mr.  Lilly.  Mr.  Nelson,  Mr.  Parr,  and  at  one  time  Mr.  Tom  Town- 
send  also  indicated  a  portion  of  this  conversation.  Mr.  Townsend 
called — I  will  have  to  look  up  the  date.  I  don't  have  the  date,  and  I 
don't  have  the  note  in  front  of  me.  But  I  received  a  telephone  call  from 
Mr.  Tom  Townsend.  He  was  still  working  with  AMPI.  He  apparently 
was  in  Wichita,  Kans.,  and  it  was  after  Mr.  Valentine  had  been  paid. 

Mr.  Townsend  asked  for  me.  He  talked  with  Gary  WoofL  Mr.  Wood 
is  now  the  comptroller  who  replaced  Mr.  Isham.  And  Mr.  Gary  Wood 
later  told  me  that  Mr.  Townsend  tried  to  reach  me,  and  so  I  called  Tom 
Townsend.  I'm  not  sure  if  I  called  him  in  Wichita,  but  I  did  talk 
to  him. 

He  asked  me  if  the  commitment — or  he  had  asked  Gary  Wood,  and 
again  he  asked  me  if  the  commitment  to  Governor  Dc-ckmg  had  been 
fidfilled.  And  I  told  him,  insofar  as  I  knew,  any  commitment  we  might 
have  to  Governor  Docking  had  been  fulfilled.  Because  we  have  con- 
tributed, the  committee — and  I  say  this  in  the  word  of  Committee  for 
TAPE  funds,  or  TAPE  funds,  because  we  have  contributed  to 
Governor  Docking. 

But  he  pressed  a  little  further.  He  said,  I'm  not  really  talking 
about — he  has  a  Century  Club  membership  that  we  contribute  to.  Tiiis 
is  a  Kansas  Docking  club,  an  effort  for  him  to  raise  money.  We  had 
members  of  that.  We  contributed  to  his  reelection.  But  this  was,  he 
said,  "This  is  an  obligation,  a  commitment  we  have  to  him  in  the 
amount  of  $25,000." 

And  I  told  Tom,  "Insofar  as  I  know,  we've  fulfilled  all  commitments 
we  have  to  Docking." 

Since  that  time — I  mean,  for  some  reason  nothing  that  Mr. — well, 
certainly  what  Mr.  Townsend  said,  but  not  in  any  other  light,  because 
when  we  were  going  back  to  these  notes  that  were  made  at  that  time, 
I  see  $25,000  commitment  to  Governor  Docking  of  Kansas.  And  pos- 
sibly he  was  referring  to  the  same  $25,000  commitment.  But  I  don't 
know. 

Then  too,  in  talking  with  Mr.  Parr  and  Mr.  Nelson,  I  have  some 
notes  and  I  have  States  listed.  They  total  $140,000.  But  it  indicates, 
Iowa,  $50,000  of  this  money  would  be  spent  in  the  State  of  Iowa.  I've 
got  H.  S.  N.,  indicating  Harold  S.  Nelson,  that  was  his  statement.  Kan- 
sas, $25,000,  I  have  D.  P.,  indicating  Dave  PaiT  made  that  statement. 
Oklahoma,  $15,000,  Dave  Parr,  D.  P.  indicating  Dave  Parr  made  that 
statement.  Minnesota,  $45,000;  H.  S.  N.,  meaning  Harold  S.  Nelson. 
Minnesota,  $45,000,  H.  S.  N.,  this  totaled  $145,000.^ 

At  another  place,  on  the — I  have  checked.  And  Senator  Humphrey 
was  contributed  $5,000  through  committee  for  TAPE.  But  again,  these 
notes — I  mean  the  figures  may  not  add.  JBut  I  mean — so,  I  really  don't 
know  what  obligations  might  have  been  obligated  for  these  moneys, 
what  role  that  Valentine,  Sherman  &  Associates  had  to  play  in  it. 
What  the  purpose  of  their  having  sent  the  bills  to  me  might  have 
been  for. 

Mr.  Sanders.  Your  listing  of  various  funds  for  these  States  with 
the  initials  of  Nelson  and  Parr  opposite,  would  you  explain  to  me  how 
your  notes  in  that  respect  were  compiled  ? 


6152 

Mr.  Lilly.  My  notes,  I'm  not  sure  I  have  the  original  notes.  They 
were  written  on  a 

Mr.  Sanders.  Would  it  have  been  one  at  a  time,  and  then  you  put  it 
all  together? 

Mr.  Lilly.  No  ;  these  were  at  the  same  time,  at  the  same  meeting. 

Mr.  Sanders.  You  learned  this  information  all  at  the  same  time? 

Mr.  Lilly.  Mr.  Parr  and  Mr.  Nelson  were  at  a  meeting  together, 
and  again,  I  tried  to  zero  in  on  the  Valentine,  Sherman  &  Associates, 
what  is  this.  And  well,  we're  getting  names  together,  $50,000  would 
be  spent  in  the  State  of  Iowa,  and  this  was  what  they  gave  to  me  at 
the  time. 

Mr.  Sanders.  Would  this  liave  been  after  July  19, 1971  ? 

Mr.  Lilly.  Yes,  it  would  have  been  after  July  and  sometime  before 
January  1972. 

Mr.  Sanders.  And  it  would  have  been  a  meeting  between  you.  Parr 
and  Nelson? 

Mr.  Lilly.  Yes.  It  could  have  been  in  San  Antonio.  It  could  have 
been  at  a  board  meeting.  I  don't  know  if  my  original  notes,  but  I  do 
have  the  original  notes,  ami  they  would  reflect  approximately  what 
you  see  here,  excepting  it  is  in  my  handwriting. 

Mr.  Sandeirs.  Do  you  thmk  an3^one  else  besides  Parr  and  Nelson 
would  have  been  present  ? 

Mr.  Lilly.  Tom  Townsend,  I  did  mention,  "had  a  telephone  call." 
He  possibly  could  have  been  present  at  this  meeting. 

Mr.  Sanders.  At  that  meeting  Parr  and  Nelson  made  known  to  you 
that  the  Valentine — ^that  the  funds  going  to  Valentine  would  be  allo- 
cated tD  the  various  States  according  to  the  list  that  you  have  now 
given  us? 

Mr.  Lilly.  That  was  what  they  indicated  at  the  time. 

Mr.  Sanders.  Was  that  the  first  indication  that  you  had  of  any  break- 
down of  the  funds  to  Valentine  ? 

Mr.  Lilly.  Well,  in  my  notes  I  think,  which  you  have,  I  have  a  sta^te- 
ment  in  the  prepared  statement,  "July  19(?),  1971,"  I  stated  about 
this  time  a  meeting  was  held.  Harold  Nelson,  Dave  Parr,  Jack 
Chestnut,  possibly  Tom  Townsend,  and  others  met  at  the  Hubert 
Humphrey — met  at  the  home  of  Hubert  Humphrey  in  New  Waverly, 
Minn. 

And  then  I  state  shortly  after  this  Harold  Nelson,  Dave  Parr,  and 
Tom  Townsend  told  me — I  have  in  San  Antonio,  and  that  leaves  a 
question  mark  in  my  mind.  I  wouldn't  be  sure  about  that  being  the 
place  that  we  were  committed.  And  you  can  see  what  my  notes  state. 

Mr.  Sanders.  Now,  is  what  you  have  just  a  few  minutes  ago  been 
telling  me  about  a  meeting  between  you  and  Nelson  and  how  you  com- 
piled the  list  of  State  allocations,  is  that  the  meeting  that  is  referred 
to  in  the  second  paragraph  of  your  statement? 

Mr.  LiLi^Y.  I  believe  that  would  be.  I  believe  it  would  be,  it  would 
correspond.  I  have  Iowa,  and  I  have  Kansas.  I  have  Oklahoma,  and 
Minnesota. 

Mr.  Sanders.  You  think  that  would  be  the  same  thing  ? 

Mr.  Lilly.  I  think  that  would  be  the  same. 

Mr.  Sanders.  So  you  indicate  there  tliat  this  is  occurring  shortly 
after  July  19? 

Mr.  Lilly.  The  meeting  between  them  ? 


6153 

Mr.  Sanders.  Yes. 

Mr.  Lilly.  Well,  I'm  not — when  I  say  shortly  after,  this  could  have 
been  2  weeks.  It  could  have  been  a  month.  It  could  have  been  2  months. 

Mr.  Sanders.  OK. 

Was  it  made  known  to  you  what  would  happen  to  those  funds  after 
they  were  received  in  those  States? 

I  mean  at  that  meeting,  now. 

Mr.  Lilly.  I  truthfully  can't  remember  at  what  point  Mr.  Nelson 
informed  me  that  Valentine  and  Associates  were  putting  together  a  list 
of  people  for  mailing  for  insurance  solicitations.  My  notes  are  not  that 
complete,  and  I  didn't  make  note  of  it.  I  didn't  refer  to  it  in  my  notes. 
I  don't  believe  I  have  any  notes  on  it.  And  I  would  not  rule  out  the 
possibility  of  it  being  stated  here. 

But  on  the  other  hand,  I  would  not  say  that  he  told  me  at  this  par- 
ticular time. 

Mr.  Sanders.  Later  on  in  your  statement,  you  say  that  the  break- 
down according  to  individuals,  which  totals  $137,000,  was  given  to  you 
by  someone  at  AMP  I. 

Do  you  know  who  it  is  ? 

Mr.  Lilly.  I  have  several  notes,  and  at  one  place  I  have,  I  mention 
the  Tom  Townsend  telephone  call.  At  another  time,  I  have  some  notes, 
and  part  of  these  are  in  my  handwriting,  and  part  of  them  would  be 
in  Dave  Parr's,  and  part  of  them  would  be  in  the  handwriting  of  Tom 
Townsend — figures.  And  I  believe  it  is  on  a  small  piece  of  paper.  It  is 
somewhere  in  my  files.  I  mean,  I  could  get  it. 

And  again,  when  1  say,  this  is  at  least  who  I  tie  to  having  met  again, 
Dave  Parr  and  Tom  Townsend  at  some  time  dunng  this  period  of  time. 
So  when  I  say  someone  at  the  office,  I  would  tie  it  down  to  those  two 
people. 

Mr.  Sanders.  Did  you  learn  the  means  by  which  these  funds  would 
ultimately  be  received  by  these  individuals? 

Mr.  Lilly.  No,  I  don't  know  that.  I  know  that  the  invoices  were  sent 
in.  The  checks,  AMPI  checks  were  sent  to  Valentine  and  Associates. 
But  I  didn't  pursue  it  any  further. 

Mr.  Sanders.  Did  it  appear  to  yon  that  Valentine  was  in  fact  doing 
some  work  for  the  money  being  received  from  AMPI,  even  though  the 
r-esults  were  not  for  the  benefit  of  AMPI  ? 

Or  did  it  appear  that  it  was  a  total  conduit  for  funds  to  be  paid  out 
ro  these  various  persons  in  several  States  ? 

Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Liixy=  In  answer  to  your  question,  I  have  an  opinion  that  there 
IS  a  good  possibility  that  the  tapes  that  were  mailed  to  AMPI  office  by 
Valentine  and  Associates  at  a  later  date,  could  well  have  been  prepared 
at  another  time.  I  am  not  sure  that  the  money  spent  here  went  to  pre- 
pare those  particular  tapes.  I  have  no  way  of  knowing  that. 

But  I  don't  know  how  long  it  takes  to  accumulate  names.  But  I 
looked  the  other  day  when  Mr.  Weitz  was  there,  and  I  noticed,  Iowa, 
20,000  names.  And  I  may  be  wrong,  but  to  compile  and,  if  most  of 
these  tapes — I  do  know  that  the  reels  can  contain  up  to  20,000  name^. 
One  of  the  computer  people  told  me  that — if  six  reels  or  seven  reels 
of  tapes,  and  for  each  one  of  them  to  be  near  full,  to  compile  100,000 
names,  or  140,000  names  and  addresses  and  zip  codes  in  that  short  a 


6154 

time,  from  Jul}'  until  1972,  it  would  take  a  lot  of  computer  work  and  a 
lot  of  people  workiujir.  And  Valentine  and  Associates  didn't  appear  to 
be  this  largre  a  type  of  operation  to  me.  So  I  am  not  sure  that  the  tapes 
had  not  already  been  prepared,  and  were  just  merely  sent  down  as  a 
completion  of  the  cx)ntract.  I  really  don't  know. 

Mr,  Sanders.  You  say  between,  July  1971  and  February  1972,  you 
say  you  think  that's  not  enough  time  for  them  to  have  done  this  work  ? 

Mr.  Lilly.  I  don't  know  where  they  started  from.  I  mean,  if  they 
had  the  names  and  all  thev  had  to  do  was  to  put  them  together.  But 
if  you're  goings  to  get  ZIP  codes,  you're  going  to  get  names,  you're 
going  to  get  addresses,  and  be  accurate  about  it,  and  assume  that  they 
are  accurate  and  they  are  meaningfully  representative  of  the  State, 
it  would  take  a  great  deal  of  time  and  a  great  many  people  to  do  this. 
So  the  time  factor  alone,  to  me — I  mean,  it  would  not  be  impossible, 
certainly.  But  it  would  rule  out  a  lot. 

Mr.  Sanders.  There  are  various  possibilities  here  that  I  see,  and  I 
realize  that  your  answer  may  be  No.  1,  totally  speculative,  or  No.  2, 
an  educated  opinion  based  on  a  number  of  bits  of  circumstances  that 
you  have  learned,  or  No.  3,  it  could  be  based  on  substantial  facts. 

But  I  would  like  you  to  give  me  an  answer  to  one  of  these  possibili- 
ties. That  is,  that  funds,  the  payments  which  AMPI  made  to  Valentine, 
were  to  pay  for  work  which  Valentine  did  of  that  equivalent  value. 
That  is  one  possibility.  And  that  those,  that  the  work  done  then  went 
for  the  benefit  of  various  political  candidates  or  committees  in.  the 
States. 

The  second  possibility  would  be  that  Valentine  did  no  work  what- 
soever, and  merely  channeled  the  funds  received  to  various  individuals 
in  the  various  States. 

And  the  third  possibility  might  be  that  they  did  in  fact  some  work, 
but  not  of  the  total  value  of  $140,000,  and  thus  their  billings  were 
somewhat  inflated,  and  they  were  able  to  channel  some  funds  to  the 
pei^sons  in  the  various  States. 

Mr.  Nicholas.  May  I  interject  one  thing  so  the  record  will  be  clear 
on  this? 

I  think  that  Mr.  Lilly's  answer  should  be  predicated  upon  what  he 
personally  knows  about  Valentine,  Sherman  Associates,  what  was  done 
with  the  computer  tapes  by  AMPI  or  committee  for  TAPE,  and 
what,  if  anything,  anyone  in  the  organization  told  him  about  this 
Valentine,  Sherman  Associates  file,  because  he  only  knows  what  was 
told  to  him.  Now,  if  you  want  just  his  opinion  we  could  give  you  that 
re^nl  easy. 

Mr.  Sanders,  First,  I  want  to  know  if  he  has  learned  along  the  way 
of  any  circumstances  which  would  tend  to  show  which  of  these  alter- 
natives were  correct. 

Did  you  learn  of  any  circumstances  bearing  upon  any  one  of  those 
circumstances  ? 

Mr.  Lilly.  No.  Truthfully  I  don't  know,  and  any  one  of  them  could 
have  been  a  possibility. 

Mr.  Sanders.  Did  anyone  ever  tell  you  anything  that  would  be  rele- 
vant to  indicate  that  some  one  of  those  alternatives  was  correct? 

Mr.  Lilly.  No.  Possibly  the  reason — I  would  have  pursued  it  further 
at  a  later  time.  Mr.  Nelson — of  course,  we  changed  management — Mr, 
Parr  left  our  employment.  Tom  Townsend  left  our  employment.  This 


6155 

transaction  of  the  sisrnin^  of  the  documents  and  whatnot  actually 
transpired  after  they  had  left,  and  this  may  have  been  the  reason. 
Maybe  I'd  have  had  an  opportunity  to  o:ain  more  information,  but  this 
is  as  far  as  I  have  ever  gotten  on  it.  And  it  really  is.  And  after  receiv- 
ing the  reels — — 

Mr.  Sanders.  I'd  like  to  go  off  the  record. 

[Discussion  off  the  record.] 

Mr.  Sanders.  All  right,  let's  go  back  on  the  record. 

The  second  paragraph  of  your  statement  makes  mention  of  a  meet- 
ing between  several  AMPI  officials  and  rlack  Chestnut  at  the  home  of 
Senator  Humphrey. 

Mr.  liTLt.T.  Yes. 

Mr.  Sanders.  Who  conveyed  this  information  to  you  ? 

Mr.  Lilly.  Mr.  Nelson.  Mr,  Parr,  and  Mr.  Townsend.  I  mean,  I  tliink 
they  conveyed  it.  T  believe  it  says,  at  about  the  same  time  Harold  Nel- 
son, Bob  Parr,  Jack  Chestnut — oh.  T  mean  in  the  second  sentence  of 
that — shortly  after  this  meeting.  Harold  Nelson,  Dave  Parr,  and  Tom 
Townsend  told  nie  that  we  were  committed. 

In  other  words,  the  three  of  them  told  me  about  it.  I  say  in  San  An- 
tonio, and  T  put  a  question  mark  bv  that.  Probably  it  was  in  San  An- 
tonio, but  the  three  people  informed  me  about  it. 

Mr.  Sanders.  Now,  that  sentence  is  a  little  bit  hard  to  understand  in 
the  context  of  everything  else.  In  other  words,  it  infers  that  the  com- 
mitment is  for  the  total  amount  to  go  to  Humphrey  and  Mills? 

Mr.  Lilly.  True, 

Mr.  Sanders.  And  yet,  later  it  is  broken  down  to  individual  politi- 
cal figures  in  the  various  States  ? 

Mr,  TiiLLY,  That  is  true. 

Mr.  Sanders.  Can  you  reconcile  that  ? 

Mr.  Lilly.  No.  I'm  reporting  here  what  was  given  to  me  at  different 
times  during  this  short  interval  of  time  from  July  1971  until  Janu- 
nrv.  So  then,  given  bv  the  same  people,  two  or  three  different  versions 
of  what  actually  happened  and  what  the  purpose  of  this  Valentine, 
Sherman  and  Associates  money  was  for. 

Mr.  Sanders.  Although  Humphrey  appears  again  in  your  subsequent 
breakdown,  Mills  does  not  ? 

Mr.  Lilly.  That  is  true. 

Mr.  Sanders.  Do  you  have  any  further  explanation  for  that? 

Mr.  Lilly.  No.  Aarain,  I  am  not — well.  T  mieht  have  some  explana- 
tion to  this  extent,  I  don't  know  at  what  time  in  the  PrCvSidential  cam- 
paign that  Mr,  Mills  might  have  stopped  pursuing  the  possibility  of 
being  the  nominee.  I  know  that  Senator  Humphrey  stayed  in  a  rather 
lono-  time.  This  miirht  indicate  that  the  notes,  the  latter  notes  that  I 
have  on  here,  given  at  a  later  date,  you  understand,  than  those  that 
were  written  on  the  first  paafe  of  the  statement.  There  miight  have  been 
some  change  in  plans.  I  really  don't  know. 

Mr.  Sanders.  The  second  parasrraph  indicates  $50,000  for  Minnesota, 
the  last  $."^.000  to  cro  to  Humphrey  from  TAPE.  And  yet,  on  the  second 
page  breakdown  by  State  figures,  $25,000  appears  opposite  H,  H.  H, 

Can  vou  reconcile  those  two  differences  ? 

Mr.  Lilly.  No.  On  the  second  rsage,  these  are  another  set  of  original 
notes.  Maybe  T  could  identify  who  gave  them  to  me.  And  this  was  at  a 
later  meeting,  past  this  one.  Again,  another  set  of  notes  that  I  took 


6156 

down  on  the  same — even  though  it  does  not — well,  this  one  actually 
totaled  out  to  $137,000.  The  other  one  ^vas  $140,000.  And  if  it  is  meant 
that  H.  H.  H.,  that  the  money  was  spent  in  the  State  of  Minnesota,  I 
don't  know.  But  this  is  the  way  that  I  did  write  my  notes  down  at  the 
time.  And  I  will  get  my  original  notes,  and  there  might  be  an  indica- 
tion as  to  either  Tom  Townsend  and  Dave  Parr,  Harold  Nelson,  who 
I  might  have  been  talking  to  at  this  particular  time  when  this  set  of 
notes  were  made. 

Mr.  Sanders.  Does  it  appear  to  vou  that  all  payments  were  made  by 
AMPI? 

Mr.  Lilly.  All  payments  were  made  by  AMPI  ? 

Mr.  Sanders.  Does  it  appear  to  you  that  Humphrey  did  receive  an 
additional  $5,000  from  TAPE  in  this  connection  ? 

Mr.  Lilly.  I  believe  that — not  having  the  TAPE  records  in  front 
of  me — ^but  I  believe  we  did  make  a  contribution  out  of  Committee  for 
TAPE,  and  it  would  reflect  at  the  time — I  mean,  in  the  Committee  for 
TAPE  report  that  we  make.  But  if  my  memory  serves  me  right,  I 
believe  we  did  make  a  $5,000  contribution. 

Mr.  Sanders.  How  many  meetings  did  you  have  altogether  with 
Valentine? 

Mr.  Lilly.  I  went  to — well.  I  had  a  number  of  telephone  conver- 
sations, but  actual  meetings — T  went  to  Minneapolis  to  see  Mr.  Valen- 
tine. T  believe  Mr.  Valentine  was  in  San  Antonio  at  one  time  during 
this  interim.  His  billings  had  been  coming  in.  He  had  not  been 
paid  quite  as  frequently  as  he  thought  he  should  be  paid,  and  he  was 
down  to  possibly  see  me,  possibly  Mr.  Bob  Tsham.  the  comptroller,  or 
maybe  Mr.  Harold  Nelson.  And  then  I  went  to  Minneapolis  at  another 
time  to  sign  these  documents.  That  means  I  was  in  Minneapolis  two 
times  and  he  was  in  San  Antonio  one  time,  to  the  best  of  my  recol- 
lection, during  this  period  of  time. 

Mr.  Sanders.  Have  you  had  any  conversation  with  him,  either  in 
person  or  by  phone,  since — oh.  I'm  sorry.^ 

What  was  the  time  of  your  last  meeting  with  him? 

Mr.  Lilly.  Mv  last  meeting,  actually,  was  March  23,  1972. 

Mr.  Sanders.  You've  had  no  contact  with  him  since  that  time? 

Mr.  Lilly.  Well,  there  was  another  letter  where  he  sent  me  a  key 
to  the  IBM  reels.  I  have  forjrotten  the  date  of  it. 

Mr.  0'Hani>on.  April  sometime. 

Mr.  Lilly.  July  1972,  is  that  it? 

Mr.  O'Hanlon.  April  23? 

Mr.  Lilly.  April  28,  1972,  and  that  was  the  correspondence.  T  don't 
know  if  it  was,  if  there  was  a  telephone  call  in  connection  with  that  or 
not.  But  that  is  about — cited  from  correspondence,  or  possibly  a  tele- 
phone call.  I  have  had  no  further  contact  with  him. 

Mr.  Sanders.  The  letter  from  Valentine  to  you  dated  April  28. 
1972,  states  that  you  will  be  receiving  listings  for  North  Dakota  and 
Iowa.  Did  you  subsequently  receive  them  ? 

Mr.  Lilly.  I  have  seA^en  reels  in  all.  One  of  them  may  lap  over  in  two 
States.  T  believe  I  receiA'ed  six  of  them  in  one  mailing  and  one  of  them 
separate  in  another  mailing.  Maybe  I  received  five  and  two,  I'm  not 
sure  of  that.  But  I  do  believe  I  have  seven  reels. 

Mr.  Sanders.  Then  he  says  he  is  anxious  to  complete  the  project 
and  proceed  with  the  direct  mail  program  for  life  insurance  and 
Cheese  House. 


6157 

Do  you  know  of  any  further  action  by  AMPI  with  respect  to  that 
statement  ^ 

Mr.  Lilly.  No. 

Mr.  Sanders.  Did  you  take,  upon  receiving'  this  letter  from  Valen- 
tine, did  you  take  anv  action  on  the  basis  of  this  mention  of  life  in- 
surance and  Cheese  House? 

Mr.  Lilly.  No;  I  did  not. 

Mr.  Sanders.  Did  you  have  any  conversation  with  Mehren  about  it  ? 

Mr.  Lilly.  No;  it  would  have  been  Dr.  Mehren  fit  the  time  and  I 
liad  no  conversation  with  him.  As  a  matter  of  fact,  it  was  placed  in 
the  file  and 

Mr.  Sanders.  You're  saying:  that  it  was  perfectly  obvious  to  you  that 
the  tapes  did  not  have  as  a  purpose  the  life  insurance  proofram  or 
Cheese  House? 

Mr.  Lilly.  Well,  there's  every  indication  of  that,  because  no  one 
within  AMPI  had  made  any  effort  to  get  concerned  about  the  tapes 
and  the  names  that  Valentine  was  to  get  together.  They  had  been 
there  for  some  time.  And  so  it  is  evident  to  me,  yes. 

Mr.  Sanders.  You  must  have  thought,  then,  that  he  was  stating 
this  so  as  to  complete  the  documentary  record  ? 

Mr.  Lilly.  T  think,  in  some  of  the  documents,  it  might  tie  back 
into — if  you  read  them  closely — to  some  of  the  information  that  he 
had  prepared,  and  it  would  be  in  keeping  with  the  entire  correspond- 
ence file  that  he  prepared  about  this  list  of  names. 

Mr.  Sanders.  Would  you  ha^'e  thought  that  he  was  making  a  state- 
ment like  that  in  order  to  make  the  file  look  legitimate  ? 

Mr.  Lilly.  To  close  it  out,  yes. 

Mr.  Sanders.  When  in  fact  this  was  not  true  to  the  best  of  your 
knowledge? 

Mr.  Lilly.  Well,  he  closed  out  the  file,  but 

Mr.  Sanders.  "When  in  fact  the  intention  for  the  programs  was 
not.  true  ? 

[Discussion  off  the  record.] 

Mr.  Sanders.  Back  on  the  record. 

As  each  Valentine  invoice  was  received,  did  it  come  to  you  ? 

Mr.  Lilly.  Yes.  Well,  no.  T  believe  the  invoices  were  mailed  to  Mr. 
Tsham. 

Mr.  Sanders.  They  say,  "Attention  Bob  Lilly." 

Were  they  routed  thi-ough  you  before  payment? 

Mr.  Lilly.  That's  quite  possible.  T  don't  remember. 

Mr.  Sanders.  Now,  the  copies  we  have  bear  no  handwritten  mark- 
ings Avhatsoever. 

Would  these  copies  have  been  made  before  processing? 

Mr.  Lilly.  Thev  must  have  been,  because  I  haA^e 

Mr.  Sanders.  Or  maybe  they  are  copies  of  the  Valentine  file? 

Mr.  Lilly.  T  have  copies  of  invoices.  My  copies  of  the  invoice  459 — 
Do  you  have  a  copy  of  invoice  459  ? — up  at  the  top  of  that  T  have  "OK, 
B.  A.  L.",  indicating  T  approved  that  for  payment. 

Mr.  Sanders.  T  see  that. 

Mr.  LiLT,Y.  Invoice  460.  dat<^d  September  24,  "OK,"  up  at  the  top ; 
invoice  415,  August  9,  it  says.  "Attention  Bob  Lilly."  T  see  no  signa- 
ture on  it,  no  approval  mark,  nor  do  I  on  invoice  168,  directed  to  me, 
nor  is  there  any  approval  mark  of  mine  or  anyone  else's  on  invoice 
168.  Invoice  157  has  no  markings  or  approval  of  mine.  Invoice  474  has 


6158 

the  approval  of  H.  S.  N.  on  it,  indicating  Mr.  Nelson  approved  that 
one.  The  same  is  true  on  invoice  473,  November  12.  Mr.  H.  S.  N.  ap- 
proved that  one. 

I  believe,  if  you  were  to  pull  out  the  actual  invoices  that  are  in  the 
file,  you  would  find  stamps  and  signatures — I  mean,  we  have  other 
identification  as  to  the  account  it's  charged  to.  and  other  notations 
marked  on  it.  So  I  am  not  sure  when  these  particular  copies — pos 
sibly  they  were  made  at  the  time  they  came  in  to  me,  I  put  the  OK 
on  them,  T  sent  them  on  to  Bob  Isham  for  payment.  But  I  believe  the 
actual  invoices  that  were  actually  paid  that  were  sent  in  by  Valentine, 
Sherman  &  Associates,  and  not  the  xeroxed  copies,  would  give  you 
more  information  as  to  who  handled  them  and  how  they  were  handled 
there  within  the  office.  I  think  they  would  still  show,  those  that  I  have 
my  signature  on  or  my  initials  on,  would  still  have  the  same  initials 
on  them.  Then  the  ones  with  Mr.  Nelson — I  am  not  saying  I  did  not 
approve  those  that  did  not  have  any  initials  on  them.  I  possibly  could 
have. 

Mr,  Sanders.  Your  statement  indicates  in  the  second  paragraph 
tliat  there  were  still  possibly  others  in  attendance  at  the  meeting  in 
the  home  of  vSenator  Humphrey  ? 

Mr.  Lilly.  Yes. 

Mr.  Sanders.  Can  you  now  add  any  dljbher  possible  names  to  that? 

Mr.  TyiLLT.  There  is  one  person  that  possibly  could  have  attended, 
an  employee  of  AMPI,  Mr.  Joe  Johnson. 

Mr.  Sanders.  Was  it  ever  indicated  to  you  that  Senator  Hum- 
phrey was  present? 

Mr.  LiiJ  Y.  From  the  statement  of  Mr.  Nelson  and  Parr  and  Town- 
send  it  certainly  indicated  to  me  that  Mr.  Humphrey  was  present, 
because 

Mr.  Sanders.  Now,  your  statement  does  not  so  indicate. 

Mr.  Tvii,LY.  Well,  mv  statement  indicates  in  the  second  paragraph 
that  there  was  a  meeting  at  the  home  of  Hubert  Humphrey  in  New 
Waverly. 

Mr.  Sanderss.  Are  you  saying  that  you  meant  to  say  by  that  that 
he  was  himself  also  present  ? 

Mr.  Lilly.  Yes ;  I  did. 

Mr.  Weitz.  I  have  a  few  questions. 

When  Dr.  Mehren  replaced  Mr.  Nelson.  Januarv  1972.  even  though, 
bv  the  records  which  we  have,  althousrh  the  invoices  were  apparently 
paid,  did  you  have  occasion  to  discuss  this  matter  with  him  at  any 
time  ? 

Mr.  Lilly.  With  Dr.  Mehren  ? 

Mr.  Weitz.  Yes. 

Mr.  T>iLLY.  Tt  has  only  been  of  recent  times,  within  the  last  month 
or  6  weeks,  that  I  have  mentioned  Valentine,  Sherman  &  Associates. 

Mr.  Weit7.  a  nd  he  never  asked  you  what  their  billinirs  represented  ? 

Mr.  LiLi-Y.  No,  T  am  not  sure,  after  the  chancre  in  m.anaffement, 
that  he  actuallv  saw  the  billincrs  that  did  come  in  after  he  became 
.<^eneral  manacrer,  and  T  am  not  sure — unless  there  are  other  billings 
than  what  T  have,  all  the  billinsTs  would  have  been  paid  prior  to  the 
time  he  became  s'eneral  manager. 

Mr.  Weitz.  Well,  besides  billin.<rs,  the  accounting  year  for  A1\H*T. 
as  T  understand  it,  is  Julv  1  to  June  30. 


6159 

Mr.  LiT.LY.  True. 

Mr.  Weitz.  So,  for  example,  the  1971-72  fiscal  year  for  AMPI 
would  include,  for  example,  the  financial  statements  for  those  periods 
would  include  a  breakdown.  I  have  seen  those  breakdowns,  and  they 
include,  for  example,  moneys  paid  to  Valentine,  Sherman  and  Asso- 
ciates. Do  you  know  whether  Dr.  Mehren  ever  asked  you  or  anyone 
else  in  the  organization  what  those  expenses  represented? 

Mr.  Lilly.  I  do  not  remember  them  having  asked  me.  They  could 
have  asked  Rob,  or  I  assume  someone  else,  but  I  did  not  have  any  con- 
^'ersation  about  it. 

Mr.  Weitz.  All  right. 

Now,  do  you  know  of  any  connection  between  these  transactions 
involving  Valentine,  Sherman  and  Associates  and  either  Bill  Connell 
C-o-n-n-e-1-1,  or  Ted  van  Dyk? 

Mr.  Lilly.  No.  Bill  Connell — and  it  would  be  hard  for  me  to  put  a 
date  on  it,  did,  or  was,  employed,  and  I  have  very  little  information 
about  it,  to  produce  a  film  of  some  kind.  I  have  even  forgotten  w'hat  the 
film  was  to  have  been  on.  I  think  the  total  cost  of  that  project  was  to 
have  been  in  the  neighborhood  of  $100,000. 

I  do  know,  at  one  of  the  AMPT  board  meetings,  that  Mr.  Connell 
was  present,  and — oh,  possibly  10  minutes  of  the  board's  time  was 
taken  by  Mr.  Connell  projecting  a  few  slides  on  a  screen,  as  to  some 
ideas  that  he  might  have  been  developing  for  the  dairy  industry,  and 
I  do  not  even  remember  what  those  slides — possibly  it  was  a  movie. 
Wliat  I  do  remember  is  having  made  a  board  meeting,  and  taking  a 
few  minutes  of  time,  and  that  has  been  some  time  ago.  I  believe  it  was 
after  the  change  in  managers  from  Mr.  Nelson  to  Dr.  Mehren.  If  any- 
thing ever  materialized  out  of  that,  I  am  not  aware  of  it,  so  I  do  not 
know  a  ffreat  deal  more  about  it. 

Mr.  Weitz.  Was  Mr.  Connell  in  fact  hired  and  paid  any  moneys  in 
connection  with  that  presentation  ? 

Mr.  Lilly.  I  do  not  know  that — oh,  you  mean  at  that  particular  in- 
stance ?  T  do  not  know  that  either. 

Mr.  Weitz.  Or  subsequent  to  that? 

Mr.  Lilly.  T  do  not  know.  I  do  not  have  the  records  on  it.  I  had  no 
connection  with  it,  and  I  am  not 

Mr.  Weitz.  But  you  do  not  connect  Bill  Connell  in  any  way  with 
these  transactions  that  we  talked  about  of  Valentine,  Sherman? 

Mr.  LiT,LY.  T  know  Bill  Connell  quite  well.  T  know  him  to  be — I  have 
worked  in  political  campaigns  quite  frequentlv,  and  quite  effectively, 
and  it  is  certainlv  not  too  hard  for  me  to  think  that  it  might  have  been 
some  tie-in  but  I  have  no  way — no  one  discussed  it  with  me,  and  I  have 
no  firsthand  knowledge,  and  it  is  hard  for  me  to  go  much  further  than 
that  on  that. 

Mr.  Weitz.  A^Hiat  al)out  Ted  van  Dvk  ?  Do  you  connect  him  in  any 
way  with  this?  In  other  words,  was  his  name  ever  mentioned  in  con- 
nection with  this  transaction  ?  Did  you  ever  discuss  the  matter  with 
him  ?  Did  any  of  the  others,  either  Mr.  Valentine  or  anyone  else,  dis- 
cuss his  name  or  his  firm  in  any  way  in  connection  with  these  Valen- 
tine transactions? 

Mr  Lilly.  No.  I  certainly  do  not  recall  it,  and  I  think  that  either 
Tom  Town^end  or  Dave  Parr  would  be  the  individuals  that  were  with 
AMPT  that  could  give  yon  an  answer  closer  than  I  could  on  it.  I  mean, 


6160 

T  have  had  an  association,  too,  with  Ted  van  Dyk  in  other  things  in 
past  years.  But  I  do  not  remember  it  in  connection  with  the  1971  or 
1972  election,  with  the  fihn  that  Connell  was  to  produce. 

Mr.  Wettz.  Now%  we  have  gone  through  your  statement;  Mr.  San- 
ders has,  certainly,  at  length  with  you;  and,  as  he  has  pointed  out, 
initially,  you  raised,  or  you  reflected  early  discussions  which  mention 
Mr.  Humphrey  and  Mr.  JVIills'  commitments  to  them  in  this  regard, 
and  then  later  Mr.  Mills'  name  does  not  appear,  and  Mr.  Humphrey's 
does,  as  well  as  other  parties. 

Xow.  do  you  know  to  what  extent,  if  any,  any  of  these  moneys  either 
were  expended  on  behalf  of,  or  actually  were  contributed  to.  Presi- 
dential candidates  in, the  1972  Presidential  election? 
Mr.  LiM.Y.  No;  I  do  not. 

jSfr.  O'Hanlon^.  Do  you  know  when  Senator  Humphrey  last  ran  for 
election  as  Senator? 
Mr.  Lilly.  1970. 
Mr.O'HANLON.  1970? 
Mr.  Lilly.  Yes,  sir. 

Mr.  0"Hanlon.  You  had  indicated  in  that  list  that  $25,000  of  that 
$187,000  went  to  HHH. 
Am  I  correct  in  that  ? 

Mr.  Lilly.  Yes.  That  is  what  my  note  indicates. 

Mr.  O'Haxlon.  Would  you  laiow  whether  that  would  be  for  his 
Presidential  effort,  or  whether  that  would  have  related  to  something 
else? 

Mr.  Lilly.  Here  is  a  copy  of  my — this  is  a  xeroxed  copy  of  my  note-s, 
and  on  this,  I  have  just  HH,  25,  leaving  off  three  zeros  on  that.  I  have 
several  others;  these  are  invoices  and  check  numbers,  what  they  were 
paid.  The  States  that  were  paid.  On  this  particular  page,  I  have  some 
other  notes  that  you  have  seen,  you  see  Minnesota,  $45,000.  and  I  be- 
lieve on  the  other  one  it  was  less,  JSIinnesota  $5,000. 1  do  not  know  what 
it  said  on  the  other-.  But  anyway,  that  is  a  total  of  $140,000.  This  is 
where  I  have  HSN"  or  DP's,  Dave  Parr's  initials  beside  this.  So  it  is 
quite  easy,  if  I  said  Minnesota,  I  could  have  put  HHH  m  the  same  con- 
text. It  is  pretty  hard. 

I  have  another  page  of  notes  here.  I  knew  that  I  had  them  and  a 
xeroxed  copy.  In  a  portion  of  this.  I  have  "I~)ave  Parr,  notes,"  and  the 
T'eason  I  did  is  because  he  gave  me  this.  I  ha^e  November  10, 1971  as  the 
date  on  it,  and  I  have,  over  to  the  left,  "Dave  Parr,  notes."  meaning 
that  this  is  actually  his  writing.  A  portion  of  it  is  mine;  and  he  put  on 
$15,000,  Oklahoma — I  put  the  Oklahoma  in — I  mean  he  put  the  figures 
down,  and  I  wrote  in  the  amoinits  25,  and  then  I  wrote  Kansas  over 
to  the  side  of  it;  10,  and  he  has — looks  like  SD.  and  that  is  scratched 
out,  and  a  question  mai'k  by  it.  And  then  I  put  Tom  over  at  the  edge, 
meaning  Tom  Townsend.  Apparently,  he  and  Dave  liad  some  dis- 
agreement. 

Under  that.  Avherc  I  scratched  out  SD,  I  put  25  undei-  that,  and  then 
there  is  50  over  on  the  side,  and  I  have  the  initials  HHH,  indicating- 
this  was  what  they  would  have  told  me  at  the  time,  and  this  is  actually 
their  writing.  And  these  figures  only  amount  to  $100,000.  and  this  is 
as  late  as  November  10.  1971. 

.Vnd  then,  on  down  a  little  further,  in  this  same  column,  T  have  50. 
and  I  would  assume  $50,000.  Iowa  to  Hugiies  per  HSN.  \Ve11,  over  in 


I 


I 
i 


6161 

my  other  notes  I  have  $50,000  to  John  Culver,  and  then  I  have  a  25 
here,  and  these  are  in  my  writing  again,  and  I  do  not  know  what  that 
was  to  be  for. 

And  then  I  get  into  Deloss  Walker,  West  Memphis — it  has  nothing 
to  do  with  this.  See,  these  were  some  notes  again,  and  my  effort  to — any 
time  I  get  an  opportunity  to  talk  with  anyone  or  get  some  information 
on  this  Valentine  thing,  I  would  jot  down  some  notes,  and  it  is  quite 
apparent,  because  I  never  got  the  same  story  twice,  and 

Mr.  O'Hanlon.  Well,  then,  the  only  item  that  could  have  been  re- 
lated to  the  Presidential  campaign  as  such  would  have  been  the  one 
relating  to  Humphrey.  The  others,  like  Docking — of  course,  that  is  a 
Governor's  campaign.  Is  that  correct  ? 

Mr.  Lilly.  Well,  unless — I  do  not  know  how  much  credence  you 
want  to  lend  to  a  portion  of  my  statement  where  I  mention  that  we 
are  obligated — but  Mr.  Nelson,  Parr,  and  Townsend  told  me  we  were 
committed  $140,000  to  Hubert  Humphrey  and  Wilbur  Mills. 

Mr.  O'Hanlon.  How  it  was  allocated,  State  by  State,  or  for  whose 
benefit,  you  do  not  know,  is  that  it  ? 

Mr.  Lilly.  I  have  all  sorts  of  little  scribbled  notes  again,  and  I 
have  attempted  to — now  here  ai-e  some  notes,  and  this  is  Tom  Town- 
send 's  note;  it  is  actually  in  his  writing:  "$50,000  Iowa,  $25,000  Kan- 
sas, $10,000  SD"— South  Dakota— "$15,000  Okla*"— Oklahoma— that  is 
$100,000.  And  then  a  line,  and  then  "50  HHH."  And  this  was  in 
Tom  Townsend's  writing.  And  again,  that  was  a  conversation,  and  so 
I  think  this  is  just  a  duplication  of  those  same  notes,  and  my  notes, 
unfortunately,  are  rather  barren,  rather  thin.  Except,  I  believe,  that 
this  is  a  conversation  the  week  of — here  is  a  note;  the  week  of  June  20, 
1972.  Tom  Townsend  repeatedly  called  me,  but  I  was  out  of  pocket. 
Townsend  talked  with  Gary  Wood,  AMPI  comptroller,  in  desperation, 
and  asked  Gary  if  we  had  fulfilled  our  commitment  to  Docking.  I  was 
told  this  by  Gary,  meaning  Gary  Wood. 

On  June  22,  1972, 1  called.  I  talked  with  Tom  Townsend.  He  was  in 
Topeka,  Kans.,  and  just  before  visiting  Governor  Docking;  Townsend 
asked  me  if  we  had  completed  our  commitment  to  Docking,  at  the  time, 
I  said  I  assumed  so,  and  on  Saturday,  June  24,  1972, 1  realized  he  was 
referring  to  the  commitment  of  $25,000  paid  through  Valentine  Asso- 
ciates and  referred  to  above.  This  may  have  been  an  assumption  on 
my  part,  because  I  did  check,  Ave  had  no  commitment  to  him.  So, 
again  I 

Mr.  O'Hanlon.  What  was — you  mentioned  INIr.  Johnson.  Was  it 
$55,000  or  $50,000  of  the  $187,000  that  you  allocated  to 

Mr.  Lilly.  You  mean  in  these  notes  I  was  reading  from? 

Mr.  O'Hanlon.  Yes;  I  was  wonderinir  what  office  he  was  interested 
in.  Is  there  not  a  $55,000  figure,  or  was  it  $35,000?  I  guess  not. 

That  is  all  of  Oklahoma? 

Mr.  Lilly.  Oh  ?  TTli-huh. 

Mr.  Weitz.  Mr.  Lilly,  I  have  one  other  question — you  talked  about 
the  contact  by  Tom  Townsend.  Do  you  recall  an  earlier  contact  in  1972, 
or  a  conversation  which  Mr.  Isham  might  have  asked  you  about  any 
commitments  with  regard  to  some  other  State,  oi-  as  part  of  this  earlier 
transaction? 

Mr.  Lilly.  I  cannot  i-ecall  at  the  moment. 


6162 

Mr.  Weitz.  Do  you  remember  a  contact  that  you  either  heard  about 
or  received  from  someone  on  behalf  of  Bob  Barker,  requesting  at  an 
earlier  time  whether  the  commitment  to  Kansas  had  been  fulfilled? 

Do  you  recall  anything:  in  connection  with  that  request? 

Mr.  LilIjY.  You  mean  Norrnan  Barker? 

Mr.  Weitz.  Norman  Barker,  I  am  sorry. 

Mr.  Lilly.  It  is  quite  possible.  Norman  Barker  is  a  dairy  farmer 
and  an  AMPT  director,  and  rather  active  politically.  And  T  have  talked 
to  Norman  Barker  many  times  about  political  contributions  with- 
in the  State  of  Kansas,  and  without— I  mean,  it  is  hard  for  me  to  be 
more  r^sponsiA^e  to  your  question.  If  you  could  give  me  a  tim.e  and  a 
place 

Mr.  Weitz.  It  would  be  sometime  in — let's  see — February  or  March 
of  1972,  when  he,  or  perhaps  someone  at  his  direction,  contactins;  Mr. 
Isham  with  regard  to  having  fulfilled  a  commitment,  requesting 
whether  a  commitment  to  Kansas  had  been  fulfilled. 

Mr.  Lilly.  I  believe  that  I— I  think  so.  and  I  believe  I  have  a  note 
somewhere  that  Norman  Barker  did  question  about  this  commitment, 
and  I  would  assume  that  Mr.  Barker  was  referrinjr  to  the  same  com- 
mitment that  Mr.  Townsend  was  talking  about  to  Governor  Docking. 
A.nd  I  do  not  have  those  notes  with  me,  but  I  believe  I  do  have,  and 
I  think  Mr.  Barker  would  have  been  concerned.  No.  1,  and  he  would 
have  contacted  me.  No.  2. 

Mr.  Weitz.  How  do  you  suppose  he  came  to  know  this  commitment? 
This  was  not  a  TAPE  commitment,  I  take  it?  This  was  an  expendi- 
ture of  AMPI  funds. 

Mr.  Lilly.  It  certain! v  was  AMPI  funds.  He  and  Mr.  Townsend — 
Mr,  Townsend  originally  was  from  the  State  of  Kansas,  and  was 
working  with  one  of  the  cooperatives.  It  became  a  part  of  AMPI  at  a 
later  date,  so  he  and  Mr.  Barker  were  rather  close  friends,  and  if  Mr. 
Barker  became  aware  of  it,  I  am  sure  this  is  how  he  was  informed 
about  it. 

Mr.  Weitz.  Mr.  Lilly,  you  said  that,  in  one  portion  of  your  notes,  the 
moneys  are — certain  moneys  are  designated,  certain  amounts  are  des- 
ignated for  Minnesota.  In  another  portion  of  vour  notes,  similar 
amounts  or  other  amounts  are  designated  for  HHH  or  HH.  Would 
you  take  it  that  the  moneys  from  Minnesota  were  intended,  in  fact, 
for  Hubert  Humphrey,  or  the  moneys  from  Minnesota,  or  that  are 
desiernated  as  HH.  were  intended  for  other  candidates  in  Minnesota 
at  Mr.  Humphrey's  direction,  or  are  you  able  to  tell  us  one  way  or 
another? 

Mr.  Lilly.  I  am  not  able  to  tell  you  one  way  or  another.  My  notes 
are  so  confusing,  and  I  have  so  many  different  ways  of  going  on  this, 
that  it  is  hard  for  me  to,  without — it  is  rather  limited.  It  is  all  the 
information  I  really  have  on  it. 

Mr.  Sanders.  Just  a  few  moments  ago,  you  made  reference  to  some 
handwritten  notes  you  have  before  you,  and  you  indicated  that  one  of 
the  sheets  was  in  the  handwriting  of  Townsend.  How  did  you  come  into 
possession  of  that? 

Mr.  Lilly.  Mr.  Townsend — this  is  an  effort  from  me,  again  to  try 
to  find  out  what  happened,  where  these  moneys  went,  and  what  the 
Sherman  Associates  happened  to  be,  and  again,  he  wrote  down,  as 
at  an  earlier  time  where  he  had  written  part  of  them,  and  he  and  Dave 


6163 

Parr — Dave  Parr  had  written  them  before.  And  this  is  at  another  time, 
and  again  I  got  him  to  reduce  them  to  writing,  and  came  up  with  c 
totally  different  figure  this  time  than  I  had  before.  So,  I  am  not  a  lot 
better. 

Mr.  Sanders.  Can  vou  give  me  an  approximate  time  when  he  would 
have  made  those  writings  ? 

Mr.  Lilly.  No.  I  have  the  originals,  but  there  is  no  date  on  this, 
and  as  near  as  I  could  time  it,  it  would  be  between  July  1971  and 
January  1972. 

Mr.  Sanders.  All  right. 

Are  you  delivering  those  to  the  committee  ? 

Mr.  Lilly.  These?  I  would  like  to  get  a  copy  from  you,  if  I  may. 

[Discussion  off  the  record.] 

Mr.  Sanders.  Let's  go  back  on  the  record. 

Mr.  Nicholas.  Mr.  Lillv,  let  me  ask  you  this.  In  connectioh  with  the 
file  that  you  have  on  the  Valentine,  Sherman  Associates,  No.  1  is,  who 
actually  made  up  that  file  ? 

Mr.  Lilly.  Mr.  Valentine  made  up  the  entire  file,  telling  me  that 
they  used  different  typewriters,  different  girls  within  his  office  to 
do  it. 

Mr.  Nicholas.  In  order  to  be  quite  clear  in  the  record  for  any  future 
reference,  for  instance,  this — outside  of  signing  this  letter  of  agreement 
that  is  on  the — that  is  attached  to  the  front  part  of  the  files,  and  by 
Jack  Valentine,  partner,  April  17,  1971,  and  then  by  Bob  A.  Lilly, 
April  29,  1971,  Associated  Milk  Producers,  Inc. — outside  of  signing 
that,  did  you  ever  know  anything  about  any  letter  of  agreement  ? 

Mr.  Lilly.  This  was  my  first  knowledge,  and  it  was  signed — what 
day  it  was  signed  on,  it  was  signed  on  the  same  day.  It  was  not  sepa- 
rate days. 

Mr.  Nicholas.  In  other  words,  these  two  dates  were  suggested,  then, 
by  Mr.  Valentine  ? 

Mr.  Lilly.  That  is  right. 

Mr.  Nicholas.  All  right. 

Now,  for  instance,  a  letter  addressed  to  Mr.  Jack  Valentine,  dated 
February  23, 1971 :  "Best  personal  regards.  Bob  Lilly." 

Did  you  write  that  letter  ? 

Mr.  Lilly.  No. 

Mr.  Nicholas.  Did  Jack  Valentine  write  that  letter,  or  someone  in 
his 

Mr.  Lilly.  Or  someone  in  his  office. 

Mr.  Nicholas.  All  right. 

Do  you  have  the  original  of  that  letter  ? 

Mr.  Lilly.  I  have  the  copy  of  this,  a  carbon  copy.  The  original,  that 
happens  to  be  a  yellow  copy  in  my  file. 

Mr.  Nicholas.  Does  Jack  Valentine  have  the  original  of  the  letter? 

]\Ir.  Lilly.  He  has  the  original. 

Mr.  Nicholas.  Well,  would  the  original  of  that  letter  be  with  an 
envelope  with  a  stamp  on  it,  and  postmarked,  or  were  they  all  taken 
up  at  one  time,  as  you  suggested  ? 

Mr.  Lilly.  They  were  all  signed  at  one  time. 

Mr.  Nicholas.  Well,  let  me  make  this  simpler. 

INIr.  Weitz.  Counselor,  I  think  there  is  absolutely  no  question  on  the 
record  that  Mr.  Lilly  has  stated  that  all  these  were  fabricated  by  Mr. 


6164 

Valentine.  They  were  all  signed  by  Mr.  Valentine  and  Mr.  Lilly  at 
once,  after  the  f  act^ — as  a  phony  file.  Is  that  not  clear  ? 

Mr.  Sanders.  I  agree.  The  record  is  clear  in  that. 

Mr.  Weitz.  I  do'  not  think  there  is  any  question 

Mr.  O'Hanlon.  That  was  at  the  airport,  was  it  not  ? 

Mr.  Lilly.  At  the  airport. 

Mr.  Sanders.  And  what  you  were  referring  to  is  what  we  have 
marked  as  exhibit  31  ? 

Mr.  "Weitz.  I  do  not  think  there  is  any  question  in  the  record  that 
that  is  the  case,  or,  at  least,  that  is  Mr.  Lilly's  testimony. 

Mr,  Nicholas.  OK. 

A  couple  of  more  questions.  Did  you  personally  have  any — were  you 
any  part  of  composing  this  file,  or  were  you  just  following 
instructions? 

Mr.  Lilly.  I  was  following  instructions. 

Mr.  Nicholas.  That  is  all  I  have. 

Mr.  Weitz.  I  have  one  other  question. 

Mr.  Lilly,  I  have  a  contract  here.  Well,  it  is  actually  a  two-page 
document  dated  with  the  heading  of  agreement.  On  the  sexx>nd  page, 
it  says,  "Valentine.  Sherman  &  Associates,"  and  it  is  signed  by  John 
Valentine,  dated  June  10,  1971.  Below  that,  it  is  signed  by  Associate^d 
Milk  Producers,  Inc.,  Harold  S.  Nelson,  with  no  date  written  in. 

Have  5^ou  ever  seen  this  document  ? 

Mr.  Lilly.  No  ;  I  was  not  aware  that  this  existed. 

Mr.  Weitz.  Did  Mr.  Nelson  ever  talk  to  you  about  it  ? 

Mr.  Lilly.  No.  I  remember  no  conversation. 

Mr.  Weitz.  And  the  first  time  you  came  to  hear,  as  I  understand, 
about  the  Valentine,  Sherman  arrangement  was  approximately  a 
month  later,  when  you  were  asked  by  Mr.  Isham  about  the  $25,000 
invoice  and  the  check  ? 

Mr.  Lilly.  That  Mr.  Nelson  picked  up  for  Valentine,  Sherman? 

Mr.  Weitz.  For  Valentine,  Sherman. 

Mr.  liiLLY.  That  is  true. 

Mr.  Weitz.  Wliy  do  we  not  mark  this  as — off  the  record. 

[Discussion  off  the  record.] 

Mr.  Weitz.   For  the   record,  let's  mark  this  as  exhibit  32. 

[l^Hiereupon,  the  document  referred  to  was  marked  Lilly  exhibit  32 
for  identification*.] 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 

Mr.  Sanders.  When  you  went  to  meet  Valentine  at  the  airport  to 
complete  the  preparation  of  the  file,  did  you  do  so  on  the  instruction 
of  anyone  within  AMPI  ? 

Mr.  Lilly.  I  had  had  instructions  from  Mr.  Nelson  in  AMPI  to 
complete  this  entire  transaction,  to  see  that  the  invoices  were  properly 
paid,  and  that  INIr.  Valentine  had  gotten  his  money. 

Mr.  Sanders.  Did  Mr.  Nelson  indicate  to  you  in  conversation  that 
he  was  aware  correspondence  had  not  been  generated  contemporane- 
ously with  events  as  they  developed  in  the  Valentine  project? 

Mr.  Lilly.  No.  In  cxinversation,  he  did  not.  Mr.  Valentine  was  the 
one  that  became  concerned,  and  contacted  me  in  regard  to  this  that 

•See  p.  6216. 


I 


6165 

nothing  existed  in  writing,  and  I  am  quite  surprised  to  see  this  other 
instrument  that  Mr.  Nelson  had  signed 

Mr.  NiCHOL.\s.  Exhibit  32  ? 

Mr.  Lilly.  Exhibit  32. 

Mr.  Sanders.  Before  you  completed  the  file  with  Valentine,  before 
you  did  it,  was  Nelson  aware  that  you  were  going  to  do  it  ? 

Mr.  Lilly.  You  mean  the  actual  signings,  the  actual  documents,  on 
March  23? 

Mr.  Sanders.  Yes. 

Mr.  Lilly.  No,  I  do  not  think  so. 

Mr.  Sanders.  You  did  not  discuss  with  him  that  Valentine  was  pre- 
paring them,  and  that  you  were  going  to  Minneapolis  to  execute  them  ? 

Mr.  Lilly.  No,  not  on  that  particular  date,  because  at  that  time,  Mr. 
Nelson  was  no  longer  the  general  manager  of  AMPI  at  that  particular 
time.  This  had  been  a  prior  discussion.  There  is  no  doubt  in  my  mind 
that  it  was  to  have  been  completed,  and  I  carried  it  through. 

Mr.  Sanders.  Was  Dr.  Mehren  contemporaneously  aware  that  you 
were  going  to  complete  the  file  ? 

Mr.  Lilly.  No. 

Mr.  Sanders.  So,  actually,  you  were  doing  it  on  your  own  initiative  ? 

Mr.  Lilly.  In  the  light  that  the  day  that  I  went  to  Minneapolis  to 
sign  it,  and  did  not  so  inform  Dr.  Mehren,  yes,  in  that  sense.  But  in 
the  sense  of  having  received  instructions  from  Mr.  Nelson  much  ear- 
lier, and  his  having  initialed,  even  as  late  as  December  of  1971,  some 
of  the  invoices,  and  following  that  instruction,  and  then  my  having 
delivered  that  letterhead  paper  to  him  at  an  earlier  time,  I  think  I 
was  only  completing  something.  At  least,  I  did  not  feel  that  I  was 
acting  solely  on  my  own  without  having  been  given  instructions. 

Mr.  Sanders.  When  did  Dr.  Mehren  become  specifically  aware  that 
correspondence  was  prepared  to  complete  the  Valentine- AMPI  file, 
which  was  not  genuine  ? 

Mr.  Lilly.  Truthfully,  I  do  not  know. 
re     Mr.  Sanders.  Do  you  think  he  is  aware  today  ? 

■     Mr.  LnxY.  Yes,  he  is  aware  of  it.  I  know  I  have  mentioned  it  to  him, 
Kind  he  is  aware  of  it. 

^-    Mr.  Sanders.  Is  it  only  within  the  last  few  weeks  that  he  became 
aware  ? 

Mr.  Lilly.  I  have  mentioned  it  to  him  in  the  last  few  weeks.  That  I 
know.  Possibly  I  had  mentioned  it  earlier  to  him  at  some  time,  some 
place.  To  go  into  the  total  context  of  it,  I  am  not  sure  that  I  ever 
have.  I  do  not  think  he  has  ever  seen  the  correspondence  relating 
thereto.  He  is  aware  that  the  correspondence  is  there,  but,  to  my  knowl- 
edge, he  has  never  actually  looked  at  the  correspondence.  He  might 
have,  but  the  reason  I  do  not  think  so  is,  because  it  has  been  in  my  file, 
and  he  has  not  asked  to  see  the  file. 

Mr.  Sanders.  AU  right. 

No  further  questions. 

Mr.  Weitz.  Off  the  record. 

[Discussion  off  the  record.] 

[A  brief  recess  was  taken.] 

Mr.  Weitz.  Mr.  Lilly,  are  you  aware  of  any  contributions  or  ex- 
penditures on  behalf  of  Mr.  Wilbur  Mills.  Congressman  Mills'  Presi- 
dential campaign,  either  during  the  years  1971  or  1972  ? 


I 


6166 

Mr.  TiiLLY.  In  1071,  about  Angiist  17.  1971,  Mr.  Nelson  did  instruct 
me  to — and  Mr.  Robert  Ishain  was  present — instnictcd  me  to  deliver 
to  Mr.  Dave  Parr  and  to  Mr.  Parr  personally,  the  amount  of  $5,000  to 
be  used  for  Mr.  Mills.  And  oil  this  same  date  I  did  ^o  to  Austin.  Tex. 
I  borrowed  $10,000.  $5,000  of  wJiich  was  delivered  to  Little  Rock.  It 
Avas  not  delivered  to  Mi'.  Parr  ]>ei"sonally,  but  it  was  delivered  to  one  or 
two  of  his  secretaries,  Norma  Kirk,  K-i-r-k,  or  Mrs.  Hunt. 

The  company  jet  was  used  foi-  me  to  fly  from  San  Antonio  to  Austin 
to  Little  Rock.  And  I  met  one  of  the  two  ladies  at  the  central  fiying^ 
service  in  Little  Rock,  and  delivered  the  $5,000  cash  in  an  envelope. 
And  on  the  way  back  to  San  Antonio  shortly  thereafter — and  this 
money  was  borrowed  from  the  Citizens"  National  Bank  in  Austin,  Tex., 
and  it  was  paid  off  on  October  8, 1971. 

The  extra  $5,000  that  had  l>een  borrowed  at  that  time,  T  might  say 
tbat  it  was  kept  by  me.  It  was  put  in  my  safety  box.  If  somethinfj  like 
this  came  up  again,  and  this  was  not  an  unusual  thing  from  past  experi- 
ence, and  it  was  ])aid  on  this  particular  note,  and  I  think  the  record 
Avould  so  mdicate  that.  So  thafs  the  reason. 

There  were  other  contributions  made  from  Committee  for  TAPE 
I  do  not  have  the  records  in  front  of  me.  but  I  believe  that  they  would 
reflect  contributions  to  IMills  for  President,  or  whatever  name  that 
he  used  in  his  campaign.  But  I  do  know  that  some  Committee  for 
TAPE  contributions  were  made  to  him. 

Mr.  Weitz.  Well,  let's  finish  with  this  August  1971  transaction,  then 
we  can  move  to  the  others. 

"With  legard  to  the  August  1071  transaction,  do  you  know  how  the 
request  was  made  to  Harold  Nelson  or  the  transaction  was  arranged 
by  Mr.  Nelson? 

Mr.  Lilly.  You  mean  the  transaction?  You  mean  the 

Mr.  Wettz.  He  requested  you  to  do  something.  How  he  came  to  know- 
about  the  transaction,  whether  he  was  contacted  directly  by  Mr. 
Parr  or  Congressman  Mills,  or  someone  else  ? 

Mr.  Lilly.  I  Avould  assume  he  was  contacted  by  INIr.  Pan-,  but 
I  don't  know  that. 

Also,  I  would  say  that  other  moneys 

Mr.  Weitz.  Well,  before  we  get  to  those — I  understand  that.  I 
want  to  understand  this  transaction,  and  then  you  will  certainly  have 
an  opportunity  to  explain  anything  else  yon  knovA-  about. 

Did  Mr.  Nelson  tell  you  how  you  would  recoup  this  $10,000,  or 
repay  it  ? 

Mr.  Lilly.  Yes,  he  told  me  that  it  would  be.  I  would  contact  a 
numlxi"  of  attorneys  which  we  dealt  with  on  retainer  fees  and  what- 
not, to  send  me  a  check  or  cash,  and  this  money  would  be  used  to  pay 
off  this  Citizens'  National  Bank  note.  And  the  attorney  in  turn  would 
bill  AINIPI  double  out  of  what  would  have  been  contributed  and  be 
paid  in  that  manner. 

Mr.  Weitz.  So  in  other  words,  you  would  have  been  repaid  in  the 
same  way  that  you  were  repaid  for  other  loans  for  similar  trans- 
actions? 

Mr.  Lilly.  That's  correct. 

Mr.  Wettz.  Did  you  sa^'  several  attorneys,  or  did  he  in  fact  men- 
tion one  specific  attorney? 

Mr.  Lilly.  Well,  at  this  particular  time  it  w^as  one  attorney,  and  that 
AA-as  Mr.  Stuart  Russell  from  Oklahoma  City.  *■ 


6167 

Mr.  Weitz.  Did  Mr.  Nelson  say  that,  or  is  that  who  you  took  it 
to  mean  ? 

Ts  that  the  only  person  you  contacted  ? 

Mr.  Liij.Y.  That's  the  only  person  I  contacted,  and  Mr.  Nelson 
did  not  direct  me  to  go  to  him.  But  at  that  particular  time  I  did 
contact  Mr.  Stuart  Russell,  and  he  was  the  only  attorney  that  I  had 
contacted  for  some  time  on  similar  transactions. 

Mr.  Weitz.  Now,  in  making  this  loan  did  you  have  to  contact 
anyone  ? 

T\Tio  did  you  contact  at  the  bank  ? 

Mr.  Lilly.  I'm  sure  the  bank  record  would  show,  but  I  would  say 
it  would  be  Mr.  Ken  Odil,  0-d-i-l.  I  believe  he  is  vice  president  at 
the  bank. 

Mr.  Weitz.  Did  you  have  to  confer  with  Mr.  Jacobsen  at  all,  or  Mr. 
Long  in  connection  with  this  loan,  or  did  you 

Mr.  Lilly.  No,  I  didn't. 

Mr.  Weitz.  Now,  when  you  delivered  the  money  to  one  of  two  people 
who  worked  for  Mr.  Parr,  either  Norma  Kirk  or  IMrs.  Hunt,  did  you 
tell  them  what  you  were  delivering  to  them,  or  did  they  seem  to  know 
that  it  was  $5,000  in  cash  ? 

Mr.  Lilly.  When  I  left  Austin  the  Little  Eock  office  was  called  that 
we  were  leaving,  and  the  pilot  had  given  me  the  estimated  time  at  which 
we  would  arrive  at  Central  Flying  Service.  And  she  was  waiting.  It 
was  quite  evident  that  she  knew  that  she  was  there  to  pick  up  an 
envelope. 

If  she  was  aware  of  what  she  was  picking  up,  I  don't  know. 

Mr.  Weitz.  'When  you  say  Central  Flying  Service,  is  that  the  private 
airport  or  private 

Mr.  Lilly.  That's  right.  That  caters  to  private  aircraft. 

Mr.  Weitz.  And  in  fact  you  did  later  obtain  fimds  to  repay  this  note 
from  Stuart  Russell  ? 

Mr.  Lilly.  Yes. 

Mr.  Weitz.  And  to  the  best  of  your  knowledge,  did  you — when  you 
contacted  ]Mr.  Russell,  did  you  discuss  the  purpose  of  the  loan  ? 

Mr.  Lilly.  No.  I  feel  that— I  say  that  and — I  called  Mr.  Russell's 
office.  I  don't  know  if  I  talked  with  Mr.  Russell  or  Jane  Hart,  Mr. 
Russell's  secretary,  and  said  that  I  needed  $10,000  to — or  $5,000  to  pay 
off  a  note. 

I  don't  know  what  it  would  have  been  in  this  instance,  but  I  could  go 
back. 

Mr.  Nicholas.  Could  we  go  off  the  record  just  a  minute  ? 

[Discussion  off  the  record.] 

Mr.  Weitz.  Did  you  ever  deliver  any  other  monej'S  in  this  way  in 
cash  to  either  Dave  Parr  or  one  of  his  secretaries  ? 

Mr.  Lilly.  Not  to  one  of  his  secretaries,  nor  do  I  remember  directly 
delivering  any  to  Mr.  Parr  myself. 

I  do  know  that  at  the  different  time  Mr.  Jake  Jacobsen  delivered 
some  money. 

Mr.  Weitz.  But  you  yourself  didn't? 

Mr.  Lilly.  No ;  1  did  not. 

Mr.  Weitz.  While  you  raise  that,  let's  move  to  that.  Well,  before 
we  do,  counsel,  would  you  like  to  question  as  to  each  individual  trans- 
action, or  question  all  at  once? 

Mr.  Sanders.  You're  still  talkinij  about  Mills  ? 


I 


6168 

Mr.  Weitz.  Yes. 

Mr.  Sanders.  No;  you  go  ahead. 

Mr.  Weitz.  All  right. 

Did  there  come  a  time  when  you  became  aware  of  a  cash  transaction 
involving  Mr.  Jacobsen  and  Mr.  Parr,  also  on  behalf  of  Congressman 
Mills? 

Mr,  Lilly.  Yes.  In  October  of  1971,  ^Ir,  Jacobsen  had  requested 
some  money — cash  money  for  Mr.  Connally.  And  this  eventually — the 
$5,000  requested  on  October  13  was  eventually  delivered  to  Mr.  Jacob - 
sen  in  Austin  on  November  10,  1971.  When  I  arrived  at  the  airport  at 
Austin,  and  as  I  went  into  the  airport,  I  ran  into  Mr.  Jacobsen — th.s 
is  about  9  a.m.,  November  10,  1971 — and  Mr.  Tom  Townsend  and  Mr. 
Dave  Parr.  Jce  Long,  a  partner  of  Mr.  Jake  Jacobsen's,  came  in  a 
short  time  later,  and  in  my  presence  Mr,  Jacobsen  handed  an  envelope. 
And  he  said,  here  is  the  $5,000  for  Wilbur  that  you  wanted,  or  the 
$5,000  for  Mr.  Mills,  or — there  was  no  money  counted,  but  Mr,  Jacob- 
sen  handed  the  envelope  to  Mr.  Parr.  And  later  the  same  day  I  went 
on  to  the  bank  and  completed  my  transaction. 

But  again,  evidently  $5,000  did  change  hands  between  Mr.  Jacobsen 
and  Mr.  Parr  for  the  benefit  of  Mr.  Mills. 

Mr.  Weitz.  Let's  go  off  the  record. 

[Discussion  of  the  record.] 

Mr.  Weitz.  I  show  you  exhibit  No.  23,  a  check  dated  November  3, 
1971 ,  in  the  amount  of  $5,000,  paid  to  the  order  of  cash,  signed  "Stuart 
H.  Russell,"  and  it  is  endorsed  on  the  back,  "Stuart  H.  Russell". 

Is  this  the  check  that  was  sent  to  you  by  jSIr.  Russell  which  you 
cashed  to  provide  the  $5,000  to  give  to  Mr.  Jacobsen  ? 

INIr.  Lilly.  Yes ;  it  is.  Handling  of  the  check  was  handled  at  the  Citi- 
zens' National  Bank  at  Austin,  Tex. 

And  while  my  records  don't  indicate  it,  I  believe  I  would  have  dealt 
with  Mr.  Ken  Odil,  and  the  reason  I  would  say  that,  on  the  edge  of  the 
check  I  notice  "OK !  Ken,"  and  it  looks — that  is  comparable  to  Mr. 
Odil's  initials  that  he  puts  on. 

Mr.  Weitz.  Now,  before  giving  this  money  to  Mr.  Jacobsen,  had  you 
arranged  ahead  of  time  to  deliver  it  to  him  on  that  day  ? 

INIr.  Lilly.  Yes;  I  had  called  him  and  told  him  I  would  be  in  Aus- 
tin on  that  particular  date, 

Mr.  Weitz.  So  he  knew  you  were  to  deliver  it  on  that  particular  day  ? 

jNIr.  Lilly.  Right. 

Mr.  Wetcz.  Either  at  the  time  you  delivered  it  to  him,  later  on  the 
day  of  the  10th,  or  earlier  in  the  day  when  you  ran  into  him  and  saw 
the  transfer  of  moneys  to  Dave  Parr  at  the  airport  in  Austin,  did  any- 
one suggest  in  any  way  that  the  two  transactions  were  related? 

INIr.  Lilly.  No  one  suggested — ^I  was  quite  surprised  to  see  Mr.  Parr 
and  Mr.  Townsend  that  worked  with  AMPI  and  Mr.  Jacobsen  deliver- 
ing cash  to  them.  And  I  did  not  reveal  my  reason  for  being  in  Austin  to 
Mr.  Townsend  or  Mr.  Parr. 

And  too,  it  was  in  the  lobby  of  the  airport  or  in  the  cotfeeshop  at 
the  airport,  and  I  visited  for  a  short  time,  possibly  had  a  cup  of  coffee 
with  them,  and  then  went  on  to  the  bank  and  cashed  the  check.  But 
there  was  no  exchange  of  words  in  regard  to  this. 

Mr.  Weitz.  But  since,  in  sequence  of  time,  the  transaction  with  Mr. 
Jacobsen  was  later  in  the  day,  did  you  raise  it  with  him  then? 


6169 

Mr.  Lilly.  No  ;  I  didn't  raise  it  with  him  then. 

Mr.  Weitz.  Did  it  raise  a  question  in  your  mind  as  to  whether  in 
fact  Mr.  Jacobsen  had  told  you  the  actual  purpose  to  which  he  was 
going  to  apply  the  monej^s  you  gave  liim  ? 

Mr.  Lilly.  Well,  certainly  it  raised  a  question  in  my  mind,  be- 
cause in  my  notes  that  I  did  keep  I  made  a  note  of  it,  and  when  I  was 
not  involved  in  this  transaction,  the  fact  that  I  do  have  a  note  of  the 
transaction  would  indicate  that  it  raised  a  flag,  I  mean,  in  my  mind. 

Mr.  Weitz.  Now,  correct  me  if  I'm  wrong,  but  at  least  two  ways 
that  Mr.  Jacobsen  could  have  obtained  moneys  that  were  not — that  re- 
lated to  AMPI  but  were  not  of  his  personal  moneys,  would  have  been 
on  the  one  hand  to  ask  you  for  money,  or  on  the  other  hand  to  extend 
his  own  personal  funds.  And  in  either  case,  to  bill  AMPI  to  reim- 
burse him. 

Those  are  two  possibilities  ? 

Mr.  Lilly.  True. 

Mr.  Weitz.  Now,  do  you  know  whether  Mr.  Jacobsen  in  fact  ex- 
tended any  of  his  own  moneys  and  was  reimbursed  by  AMPI  in  trans- 
actions that  did  not  involve  you  ? 

In  other  words,  rather  than  get  money,  have  you  extend  funds  and 
then  perhaps  pay  you  back,  rather  than  do  it  directly  ? 

Mr.  Lilly.  No.  I  add  too,  this  particular  instance  where  I  de- 
livered money  to  Mr.  Jacobsen  that  he  was  not  involved  in  one  other 
instance  in  the  amount  of  $10,000  that  he  had  requested  in  April  of 
1971.  That  was  the  proceeds  of  a  note  from  the  Citizens'  National 
Bank.  And  to  my  knowledge,  this  is  the  only — otherwise,  the  moneys 
would  have  been,  I  would  have  been  getting  checks  or  cash  from 
Mr.  Jacobsen  and  Mr.  Long. 

Mr.  Weitz,  At  the  same  time,  however,  I  think  I  showed  you  the 
other  day,  and  you  were  unable  to  identify  with  any  certainty  whether 
a  number  of  bills  of  Mr.  Jacobsen's,  I  believe,  indicated  services  ren- 
dered above  the  retainer,  whether  or  not  those  were  legitimate  or  not. 

Mr.  Lilly.  That  is  true. 

Mr.  Weitz.  That's  true. 

Mr.  Lilly.  Some  of  them  I  would  be  able  to,  I  think,  trace  down. 

INIr.  Weitz.  In  round  figures — but  there  were  a  series — I  think  I 
showed  you  as  many  as  10  or  15  bills  of  his,  that  had  an  additional 
$1,500  or  more  of — billed  as  services  rendered  above  retainer. 

Mr.  Lilly.  Over  and  above  retainer. 

Mr.  Weitz.  And  you  weren't  able  to  identify  any  of  those  particular 
payments  ? 

Mr.  Lilly.  That's  true.  No,  I  was  not. 

Mr.  Weitz.  So,  it's  conceivable  that  if  those  were  not  legitimate 
billings,  Mr.  Jacobsen  may  have  been  providing  funds  directly  to 
other  parties  and  recouping  funds  from  AMPI  without  your  knowl- 
edge ? 

Mr.  Lilly.  That  is  quite  possible. 

Mr.  Weitz.  And  this  $5,000  payment  may  or  may  not  have  been 
related  to  the  earlier,  the  later  transfer  on  the  same  day^  of  Novem- 
ber 10,  and  you  would  have  no  knowledge  of  the  connection? 

Mr.  Lilly.  That  is  true. 

Mr.  Nicholas.  You  say  may  or  may  not. 


6170 

Mr.  Weitz.  May  or  may  not.  Well.  I  take  it  there  is  an  implication 
in  your  mind  they  may  have  been  connected,  but  you  do  not  know  for 
a  fact? 

Mr.  Lilly.  I  do  not  know  that. 

Mr.  Weitz.  "Whether  it  was  that  $5,000,  or  whether  Mr.  Jacobsen 
actually  had  access  to  other  moneys  through  AMPI  that  you  had  no 
knowledge  of  ? 

Mr.  Lilly.  That  is  true. 

Mr.  Weitz.  Now,  were  there  any  other  transactions  that  you  know 
of  in  which  moneys  were  either  expended,  AMPI  funds  were  either 
expended  on  behalf  of  or  as  contributions  to  Congressman  Mills  in 
his  Presidential  campaign  effort  ? 

Mr.  Lilly.  I  do  know  that  Mr.  Joe  Johnson,  an  employee  during 
that  particular  period  of  time,  I  believe — while  an  employee  of  AMPI. 
was  spending  a  considerable  amount  of  time  in  behalf  of  Mr.  Mills, 
working  full  time,  as  well  as  a  Mr.  Tern'  Shea — S-h-e-a,  I  believe,  is 
the  way  you  spell  Mr,  Shea's  name. 

That  would  be  one  form,  of  assistance.  If  moneys  were  generated 
from  that,  I  mean  outside  of  their  own  fiscal  efforts,  I  am  not  aware 
of  it.  And  that  is  all  I  can  recall  that  did  go  in  to  Mr.  Mills. 

Mr.  Weitz.  What  about  the — could  you  tell  us  what  you  know  about 
the  Ames,  Iowa,  rally  sometime  in  1971  ? 

Do  you  know  anything  about  that  ? 

Mr.  Lilly.  I  know  that  there  was — I  had  forgotten  it  until  you 
mentioned  it,  and  I  doubt  if  I  could  recall  the  year.  But  there  was 
an  Ames,  Iowa,  rally,  and  I  believe  Mr.  Mills  was  the  primary  indi- 
vidual there.  And  I  believe  that  Mr.  Joe  Johnson  had  a  considerable 
part  of  the  work  in  putting  that  together. 

If  moneys  were  involved  or  expended,  I  am  not  aware  of  it — AMPI 
corporate  funds  outside  of  Mr.  Johnson's  own  efforts. 

Mr.  Weitz.  And  finally,  are  you  aware  of  any  political  contribu- 
tions to  Congressman  Mills'  Presidential  election  effort  -that  were 
made,  as  I  say,  through  TAPE  or  CTAPE,  and  were  duly  reported  ? 

Mr.  Lilly.  Yes;  there  were  some  political  contributions.  I  believe 
it  would  only  be  in  CTAPE,  and  they  were  duly  reported. 

Mr.  Weitz.  Now,  CTAPE  was  not  formed,  as  I  understand  it, 
until  April  1972. 

Is  that  correct? 

Mr.  Lilly.  That  is  correct. 

Mr.  Weitz.  Would  that  mean  that  these  contributions  to  Congress- 
man INIills''  1972  Presidential  election  effort  were  still  in  existence 
and  active  after  April  of  1972  ? 

Mr.  LiixY.  I  suppose  I'd  have  to  stand  corrected.  I  suppose  it  would 
haA^e  been  TAPE  funds  that  went  into — I  know  that  either  TAPE  or 
Committee  for  TAPE  did  make  some  contribution  to  the  Mills  for 
President  campaign. 

Mr.  Weitz.  As  contrasted  with  the  Mills  congressional  reelection 
effort  sometime  in  late  1972  ? 

Mr.  Lilly.  Yes ;  true. 

Mr.  Weitz.  Do  you  recall  how  much  ? 

Mr.  Lilly.  No,  I  don't.  It  has  been  reported,  and  if  I  had  access 
to  the  reports,  I  could  tell  you.  But  I  don't  have  them  with  me.  I  am 
talking  about  the  report  filed  with  the  Clerk  of  the  House  and 
the  Secretar}'^  of  the  Senate. 


6171 

Mr.  Weitz.  I  have  no  further  questions  at  this  time. 

Mr.  Sanders.  When  you  arrived  in  Austin  on  November  10,  was 
it — did  you  say  it  was  actually  in  the  airport  that  Jacobsen  handed 
an  envelope  to  Parr,  saying  that  it  was  money  for  Mills? 

Mr.  Lilly.  Yes. 

Mr.  Sanders.  And  this  was  in  the  presence  of  Townsend  and 
who — was  Long  already  there  ? 

Mr.  Lilly.  Long  joined  the  group,  and  if  I  recall  the  series  of 
incidents  as  it  happened,  I  think  the  envelope  actually  changed  hands 
after  Mr.  Long  arrived,  indicating  to  me  that  probably  Mr.  Long  had 
brought  it  to  Mr,  Jacobsen  to  transfer  to  Dave  Parr. 

Mr.  Sanders.  Now,  you  went  to  Austin  on  that  date  in  order  to 
give  money  to  Jacobsen  ? 

Mr.  Lilly.  Right. 

Mr.  Sanders.  You  had  $10,000  in  c^sh  with  you  ? 

Mr.  Lilly.  No,  I  had  a  check. 

Mr.  Sanders.  A  check  ? 

Mr.  Lilly.  Yes. 

Mr.  Sanders.  For  how  much  ? 

Mr.  Lilly.  $5,000. 

Mr.  Sanders.  You  had  still  not  cashed  it  at  the  time  that  Jacoibsen 
gave  the  cash  to  Parr  ? 

Mr.  Lilly.  No,  I  had  not  cashed  it. 

Mr.  Sanders.  Why  was  this  group  assembled  at  the  airport? 

Mr.  Lilly.  Mr.  Parr  and  Mr.  Townsend,  I  believe,  had  chartered 
a  plane.  They  had  one  chartered  at  about  that  time,  and  I  believe 
that  they  flew  to  Austin  in  the  charter  plane,  and  I  didn't  expect 
to  see  them  there.  I  flew  up — we  had  a  small  private  plane,  a  twin 
engine  plane,  Cessna  I  believe  is  what  it  was — and  I  had  flown  to 
Austin  in  it,  and  went  through  the  municipal  airport  to  rent  a  car 
to  go  to  the  bank.  And  so — and  Austin,  not  being  a  large  airport, 
you  can  pull  up  near  the  hangar.  And  I  don't  think,  even  though 
Mr.  Jacobsen  expected  me  that  particular  day  to  see  him — I  don't 
think  that  they  expected  to  see  me  in  the  airport  at  that  time  of  day. 

Mr.  Sanders.  It  was  pure  coincidence  that  you  encountered  them 
at  that  time  ? 

Mr.  Lilly.  True. 

Mr.  Sanders.  So  it  would  appear  to  you  that  Jacobsen  was  there  to 
meet  Townsend  and  Parr  coming  in  ? 

Mr.  Lilly.  He  wasn't  there  to  meet  me. 

Mr.  Sanders.  It  appeared  to  you  that  Townsend  and  Parr  had  ar- 
rived just  shortly  before  that  ? 

Mr.  Lilly.  Yes.  In  fact,  something  was  said  about  their  just  liaving 
arrived. 

Mr.  Sanders.  Well,  when  Jacobson  handed  the  envelope  to  Parr, 
did  he  indicate  how  much  was  in  it  ? 

Mr.  Lilly.  He  indicated  $5,000. 

iMr.  Sanders.  Did  Parr  make  any  response  ? 
;^,     Mr.  Lilly.  No.  He  stuck  it  into  his  coat  pocket,  and  possibly  he 
said  thank  you,  or  I  appreciate  it,  or  something.  There  was  no  response. 
Mr.  Sanders.  Explain  the  means  of  dissembling  of  the  group. 
wk.  Did  you  leave  first  ? 

^   Mr.  Lilly.  When  I  arrived  at  tlie  airport  I  saw  Mr.  Jacobsen,  _Mr. 
Parr,  and  Mr.  Townsend  in  the  coffeeshop — I  mean,  as  you  walk  into 


6172 

the  airport  in  Austin — the  lobby  itself  is  not  too  large,  and  the  coffee- 
shop  is — well,  from  the  door  I  came  into,  it  was  on  my  right,  and  it  is 
glass  fronted,  and  you  can  see  in  the  entire  coffeeshop. 

At  that  particular  time  of  day  there  were  few  people  in  the  airport. 
It  is  not  a  busy  airport.  And  they  were  sitting  next  to  the  glass — I 
mean,  the  one  nearest  me,  the  aisle  I  w^alked  by,  because  there's  a  stair- 
way in  the  center  of  the  lobby  itself.  And  so,  w^hen  I  saw  the  three  of 
them  gathered  I  went  in  to  say  hello  to  them.  And  I  believe  they  were 
having  coffee  or  milk,  or  whatever  they  might  have  been  drinking. 
And  so  I  ordered  a  cup  of  coffee,  and  at  about  that  time  Mr.  Long 
came  in,  and  I  really  believe  that  Mr.  Long  handed  the  envelope  to 
Mr.  Jacobsen.  And  there  in  my  presence  Mr.  Jacobsen  gave  the  en- 
velope to  Mr.  Parr  and  said,  here's  the  $5,000  for  Mr.  Mills.  ^ 

Mr.  Sanders.  In  what  sequence  did  the  group  separate  ?  ■ 

Mr.  Lilly.  I  left  alone  because  I  had  to  go  to  the  bank,  and  I  mean,  T 
it  opened  at  9,  and  this  was  shortly  after  9  by  that  time.  And  I  knoM^ 
that  something  to  the  effect  was  said — I  told  Mr,  Jacobsen,  "I  will 
see  you  later,"  and  Mr.  Long,  because  I  was  going  to  their  office. 

And  at  the  time  I  left,  the  four  of  them  were  still  at  the  airport,  and 
I  left  first  and  then  went  to  get  a  rent-a-car.  And  this  was  all  at  one 
end  of  the  airport,  and  possibly  they  could  have  broken  up  and  left 
while  I  was  getting  the  rent-a-car.  I  mean,  I  don't  know  when  they 
left. 

Mr.  Sanders.  At  any  time  after  that  date  did  you  learn  of  any  facts 
bearing  upon  Parr's  handling  of  that  money  ? 

Mr.  Lilly.  No. 

Mr.  Sanders,  On  this  three-page  schedule,  prepared  by  your  ac- 
countants, concerning  the  note  transactions  at  Citizens  National  Bank, 
on  the  third  page,  under  the  "Stuart  H.  Russell"  column,  there  is  a 
$5,000  entry  for  what  I  believe  is  November  12,  1970 — I  can't  be  sure. 

Mr.  Lilly.  It  appears  that  that  is  right. 

Mr.  Sanders.  That  has  no  relationship  to  the  November  3  check? 

Mr.  Lilly.  No;  that  is  in  1970  and  I'm  talking  about  1971. 

Mr.  Sanders.  Oh,  yes,  all  right.  Would  you  say,  Mr.  Lilly,  that 
every  delivery  of  funds  that  you  received  from  any  one  of  the  firms 
which  were  originally  established  as  conduits,  is  listed  in  some  manner 
or  other  on  this  three-page  accountant's  schedule  you  have  provided 
for  us?  Or  on  the  five-page  chronology  you  have  given  us,  prepared 
from  your  own  notes  ? 

Mr.  Lilly.  Yes. 

Mr.  Nicholas.  I  just  want  to  add  that  m  answer  to  your  question — 
for  any  client  to  answer  your  question — could  you  restrict  it — in  other 
words,  what  he  has  put  down,  as  I  understand  on  his — his  accountant 
has  put  down — on  that  exhibit,  Avhatever  nimiber  it  is,  and  on  the  four- 
or  five-page  outline,  everything  that  Mr.  Lilly  can  trace 

Mr.  Weitz.  Or  remember. 

Mr.  Nicholas.  Or  remember,  because  if  we  find  something  else  that 
we — that  isn't  on  here,  well  we  are  going  to  call  you. 

Mr.  Sanders.  Good,  at  the  present  time,  everything  that  you  can 
remem.ber  to  the  best  of  your  knowl